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

Zacks Equity Research
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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.

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

Legg Mason (LM) is a stock many investors are watching right now. LM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.78. This compares to its industry's average Forward P/E of 13.30. 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 0.74. 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. LM's PEG compares to its industry's average PEG of 1.36. Over the past 52 weeks, LM's PEG has been as high as 0.91 and as low as -4.02, with a median of 0.72.

Another notable valuation metric for LM is its P/B ratio of 0.92. 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. LM's current P/B looks attractive when compared to its industry's average P/B of 1.84. Over the past year, LM's P/B has been as high as 0.94 and as low as 0.63, with a median of 0.85.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 1.19. This compares to its industry's average P/S of 2.63.

Finally, we should also recognize that LM has a P/CF ratio of 5.17. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 17.67. Within the past 12 months, LM's P/CF has been as high as 9.02 and as low as 4.59, with a median of 7.83.

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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