The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.
Leggett & Platt (LEG) is a stock many investors are watching right now. LEG is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 8.66 right now. For comparison, its industry sports an average P/E of 9.68. LEG's Forward P/E has been as high as 11.45 and as low as 5.92, with a median of 8.37, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. LEG has a P/S ratio of 0.33. This compares to its industry's average P/S of 0.41.
Finally, investors will want to recognize that LEG has a P/CF ratio of 4.78. 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 7.85. LEG's P/CF has been as high as 61.65 and as low as 3.05, with a median of 4.80, all within the past year.
These are just a handful of the figures considered in Leggett & Platt's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that LEG is an impressive value stock right now.
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Leggett & Platt, Incorporated (LEG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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