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Is Legg Mason (LM) a Great Value Stock Right Now?

Zacks Equity Research
Nordson (NDSN) delivered earnings and revenue surprises of -3.14% and -0.99%, respectively, for the quarter ended April 2019. Do the numbers hold clues to what lies ahead for the stock?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Legg Mason (LM). LM is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 11.57. This compares to its industry's average Forward P/E of 12.16. Over the last 12 months, LM's Forward P/E has been as high as 13.93 and as low as -65.86, with a median of 9.28.

LM is also sporting a PEG ratio of 0.71. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LM's industry currently sports an average PEG of 1.65. Over the last 12 months, LM's PEG has been as high as 0.90 and as low as -4.02, with a median of 0.53.

Investors should also recognize that LM has a P/B ratio of 0.77. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.72. LM's P/B has been as high as 0.87 and as low as 0.51, with a median of 0.69, over the past year.

Finally, we should also recognize that LM has a P/CF ratio of 7.58. 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. LM's current P/CF looks attractive when compared to its industry's average P/CF of 12.64. LM's P/CF has been as high as 9.36 and as low as 5.41, with a median of 7.02, all within the past year.

These are just a handful of the figures considered in Legg Mason's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that LM is an impressive value stock right now.


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