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Are Investors Undervaluing Lumber Liquidators Holdings (LL) Right Now?

Zacks Equity Research

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

Lumber Liquidators Holdings (LL) is a stock many investors are watching right now. LL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

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. LL has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.4.

Finally, investors should note that LL has a P/CF ratio of 6.45. 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. This stock's P/CF looks attractive against its industry's average P/CF of 14.42. Within the past 12 months, LL's P/CF has been as high as 11.16 and as low as -9.04, with a median of -5.61.

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


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