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Legg Mason (LM) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Legg Mason (LM) closed the most recent trading day at $36.50, moving +1.87% from the previous trading session. This move outpaced the S&P 500's daily gain of 1.27%. At the same time, the Dow added 1.25%, and the tech-heavy Nasdaq gained 1.48%.

Heading into today, shares of the money manager had lost 4.86% over the past month, outpacing the Finance sector's loss of 6.15% and lagging the S&P 500's loss of 4.37% in that time.

Wall Street will be looking for positivity from LM as it approaches its next earnings report date. In that report, analysts expect LM to post earnings of $0.90 per share. This would mark year-over-year growth of 11.11%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $734.22 million, down 3.19% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.64 per share and revenue of $2.90 billion, which would represent changes of +1057.89% and +0.04%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for LM. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. The Zacks Consensus EPS estimate has moved 1.22% higher within the past month. LM is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, LM is currently trading at a Forward P/E ratio of 9.85. This valuation marks a discount compared to its industry's average Forward P/E of 10.51.

It is also worth noting that LM currently has a PEG ratio of 0.68. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Financial - Investment Management was holding an average PEG ratio of 1.48 at yesterday's closing price.

The Financial - Investment Management industry is part of the Finance sector. This group has a Zacks Industry Rank of 63, putting it in the top 25% 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.

To follow LM in the coming trading sessions, be sure to utilize Zacks.com.


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