Is Leidos (LDOS) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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.
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.
One company value investors might notice is Leidos (LDOS). LDOS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 14.41, which compares to its industry's average of 20.64. Over the last 12 months, LDOS's Forward P/E has been as high as 16.49 and as low as 11.30, with a median of 13.58.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. LDOS has a P/S ratio of 0.94. This compares to its industry's average P/S of 1.13.
Finally, investors should note that LDOS has a P/CF ratio of 13.57. 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. LDOS's P/CF compares to its industry's average P/CF of 19.76. Within the past 12 months, LDOS's P/CF has been as high as 14.93 and as low as 10.51, with a median of 12.60.
Value investors will likely look at more than just these metrics, but the above data helps show that Leidos is likely undervalued currently. And when considering the strength of its earnings outlook, LDOS sticks out at as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
