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Legg Mason (LM) Gains But Lags Market: What You Should Know

Zacks Equity Research
In the latest trading session, Electronic Arts (EA) closed at $87.50, marking a -1.89% move from the previous day.

Legg Mason (LM) closed at $36.97 in the latest trading session, marking a +0.03% move from the prior day. This change lagged the S&P 500's 0.21% gain on the day. Meanwhile, the Dow gained 0.17%, and the Nasdaq, a tech-heavy index, added 0.27%.

Prior to today's trading, shares of the money manager had gained 9.32% over the past month. This has outpaced the Finance sector's loss of 4.62% and the S&P 500's loss of 5.26% in that time.

LM will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.65, down 18.75% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $704.10 million, down 5.86% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.27 per share and revenue of $2.88 billion, which would represent changes of +960.53% and -0.87%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for LM. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 14.68% higher. LM is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note LM's current valuation metrics, including its Forward P/E ratio of 11.31. This represents a discount compared to its industry's average Forward P/E of 11.89.

Investors should also note that LM has a PEG ratio of 0.69 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Financial - Investment Management was holding an average PEG ratio of 1.54 at yesterday's closing price.

The Financial - Investment Management industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 50, which puts it in the top 20% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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