Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Legg Mason . LM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 10.18, which compares to its industry's average of 12. Over the past year, LM's Forward P/E has been as high as 13.93 and as low as -65.86, with a median of 10.28.
We also note that LM holds a PEG ratio of 0.89. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LM's PEG compares to its industry's average PEG of 1.31. LM's PEG has been as high as 0.91 and as low as -4.02, with a median of 0.68, all within the past year.
Investors should also recognize that LM has a P/B ratio of 0.91. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. LM's current P/B looks attractive when compared to its industry's average P/B of 1.81. Over the past year, LM's P/B has been as high as 0.93 and as low as 0.51, with a median of 0.83.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. LM has a P/S ratio of 1.18. This compares to its industry's average P/S of 2.32.
Finally, investors should note that LM has a P/CF ratio of 8.95. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.37. Within the past 12 months, LM's P/CF has been as high as 9.02 and as low as 5.41, with a median of 7.65.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Legg Mason is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LM feels like a great value stock at the moment.
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Is Legg Mason (LM) a Great Value Stock Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Legg Mason . LM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 10.18, which compares to its industry's average of 12. Over the past year, LM's Forward P/E has been as high as 13.93 and as low as -65.86, with a median of 10.28.
We also note that LM holds a PEG ratio of 0.89. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LM's PEG compares to its industry's average PEG of 1.31. LM's PEG has been as high as 0.91 and as low as -4.02, with a median of 0.68, all within the past year.
Investors should also recognize that LM has a P/B ratio of 0.91. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. LM's current P/B looks attractive when compared to its industry's average P/B of 1.81. Over the past year, LM's P/B has been as high as 0.93 and as low as 0.51, with a median of 0.83.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. LM has a P/S ratio of 1.18. This compares to its industry's average P/S of 2.32.
Finally, investors should note that LM has a P/CF ratio of 8.95. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.37. Within the past 12 months, LM's P/CF has been as high as 9.02 and as low as 5.41, with a median of 7.65.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Legg Mason is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LM feels like a great value stock at the moment.