Should Value Investors Buy Leidos (LDOS) 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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 stock to keep an eye on is Leidos (LDOS). LDOS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 14.79, which compares to its industry's average of 22.08. Over the past year, LDOS's Forward P/E has been as high as 16.49 and as low as 11.30, with a median of 13.58.
We also note that LDOS holds a PEG ratio of 1.82. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LDOS's industry currently sports an average PEG of 1.88. Over the last 12 months, LDOS's PEG has been as high as 2.67 and as low as 1.43, with a median of 1.72.
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. LDOS has a P/S ratio of 0.99. This compares to its industry's average P/S of 1.46.
Finally, our model also underscores that LDOS has a P/CF ratio of 13.81. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. LDOS's P/CF compares to its industry's average P/CF of 21.77. Over the past 52 weeks, LDOS's P/CF has been as high as 14.82 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.
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Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
