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Are Investors Undervaluing LCI Industries (LCII) Right Now?

·3 min read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is LCI Industries (LCII). LCII is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 8.36 right now. For comparison, its industry sports an average P/E of 24.39. Over the last 12 months, LCII's Forward P/E has been as high as 14.53 and as low as 6.13, with a median of 9.70.

Another valuation metric that we should highlight is LCII's P/B ratio of 2.38. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.77. Over the past 12 months, LCII's P/B has been as high as 3.96 and as low as 1.96, with a median of 2.86.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. LCII has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.9.

Finally, we should also recognize that LCII has a P/CF ratio of 5.37. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. LCII's current P/CF looks attractive when compared to its industry's average P/CF of 20.90. Within the past 12 months, LCII's P/CF has been as high as 11.43 and as low as 4.60, with a median of 7.92.

These figures are just a handful of the metrics value investors tend to look at, but they help show that LCI Industries is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LCII feels like a great value stock at the moment.


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