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Is Lumber Liquidators Holdings (LL) Stock Undervalued Right Now?

Zacks Equity Research
United Community Financial (UCFC) delivered earnings and revenue surprises of 4.76% and 0.31%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

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.

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 Lumber Liquidators Holdings (LL). LL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

We also note that LL holds a PEG ratio of 0.78. 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. LL's PEG compares to its industry's average PEG of 1.29. Over the last 12 months, LL's PEG has been as high as 1.24 and as low as 0.45, with a median of 0.90.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. LL has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.48.

Finally, we should also recognize that LL has a P/CF ratio of 12.07. 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 12.72. Over the past year, LL's P/CF has been as high as 161.81 and as low as -976.55, with a median of 13.70.

Value investors will likely look at more than just these metrics, but the above data helps show that Lumber Liquidators Holdings is likely undervalued currently. And when considering the strength of its earnings outlook, LL sticks out at as one of the market's strongest value stocks.


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