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, 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.

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 company to watch right now is LCI Industries (LCII). LCII is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 14.19. This compares to its industry's average Forward P/E of 19.14. Over the last 12 months, LCII's Forward P/E has been as high as 19.04 and as low as 10.65, with a median of 14.77.

Investors should also recognize that LCII has a P/B ratio of 1.78. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.91. Over the past 12 months, LCII's P/B has been as high as 2.27 and as low as 1.39, with a median of 1.86.

Value investors also use the P/S ratio. The P/S ratio 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. LCII has a P/S ratio of 0.65. This compares to its industry's average P/S of 0.67.

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 as one of the market's strongest value stocks.

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This article originally published on Zacks Investment Research (zacks.com).

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