Should Value Investors Buy LCI Industries (LCII) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is LCI Industries (LCII). LCII is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 8.56 right now. For comparison, its industry sports an average P/E of 21.14. Over the last 12 months, LCII's Forward P/E has been as high as 14.53 and as low as 6.13, with a median of 8.78.
We should also highlight that LCII has a P/B ratio of 2.41. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. LCII's current P/B looks attractive when compared to its industry's average P/B of 3.43. Over the past 12 months, LCII's P/B has been as high as 3.96 and as low as 1.96, with a median of 2.81.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. LCII has a P/S ratio of 0.57. This compares to its industry's average P/S of 0.84.
Value investors will likely look at more than just these metrics, but the above data helps show that LCI Industries is likely undervalued currently. And when considering the strength of its earnings outlook, LCII sticks out at as one of the market's strongest value stocks.
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