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Is LCI Industries a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put LCI Industries (LCII - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, LCI Industries has a trailing twelve months PE ratio of 18.7, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.34. If we focus on the stock’s long-term PE trend, the current level puts LCI Industries’ current PE ratio above its midpoint over the past five years, with the number having risen over the past few months.
However, the stock’s PE also compares unfavorably with the Zacks classified Automotive - Original Equipment sector’s trailing twelve months PE ratio, which stands at 13.21. This indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that LCI Industries has a forward PE ratio (price relative to this year’s earnings) of just 16.8, so it is fair to say that a slightly more value-oriented path may be ahead for LCI Industries stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, LCI Industries has a P/S ratio of about 1.47. This is a significantly lower than the S&P 500 average, which comes in at 3.15 right now. Also, as we can see in the chart below, this is a little below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, LCI Industries currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes LCI Industries a solid choice for value investors.
What About the Stock Overall?
Though LCI Industries might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives LCII a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have favorable. Over the last one month, both the current quarter and current year has seen one analyst moving north, compared to no movement in the opposite direction.
This has had a modest impact on the consensus estimate though as the current quarter consensus estimate has risen by 2% in the past one month, while the full year estimate has inched upper by 0.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Despite the bullish analyst sentiments, the stock holds a Zacks Rank #3 (Hold).
Bottom Line
LCI Industries is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a strong industry rank (among Top 14% of more than 250 industries) boosts our confidence on the stock.
However with Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Automotive - Original Equipment industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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Is LCI Industries a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put LCI Industries (LCII - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, LCI Industries has a trailing twelve months PE ratio of 18.7, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.34. If we focus on the stock’s long-term PE trend, the current level puts LCI Industries’ current PE ratio above its midpoint over the past five years, with the number having risen over the past few months.
However, the stock’s PE also compares unfavorably with the Zacks classified Automotive - Original Equipment sector’s trailing twelve months PE ratio, which stands at 13.21. This indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that LCI Industries has a forward PE ratio (price relative to this year’s earnings) of just 16.8, so it is fair to say that a slightly more value-oriented path may be ahead for LCI Industries stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, LCI Industries has a P/S ratio of about 1.47. This is a significantly lower than the S&P 500 average, which comes in at 3.15 right now. Also, as we can see in the chart below, this is a little below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, LCI Industries currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes LCI Industries a solid choice for value investors.
What About the Stock Overall?
Though LCI Industries might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives LCII a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have favorable. Over the last one month, both the current quarter and current year has seen one analyst moving north, compared to no movement in the opposite direction.
This has had a modest impact on the consensus estimate though as the current quarter consensus estimate has risen by 2% in the past one month, while the full year estimate has inched upper by 0.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
LCI Industries Price and Consensus
LCI Industries Price and Consensus | LCI Industries Quote
Despite the bullish analyst sentiments, the stock holds a Zacks Rank #3 (Hold).
Bottom Line
LCI Industries is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a strong industry rank (among Top 14% of more than 250 industries) boosts our confidence on the stock.
However with Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Automotive - Original Equipment industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>