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Should Value Investors Pick Lakeland Industries (LAKE) Stock?
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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 Lakeland Industries, Inc. (LAKE - 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, Lakeland Industries has a trailing twelve months PE ratio of 18.6, 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 stands at about 20.8. While Lakeland Industries’ current PE level puts it above its midpoint of 14.3 over the past five years, it stands well below the highs for the stock, thus indicating scope for entry.
Further, the stock’s PE compares favorably with the Zacks Industrial Products sector’s trailing twelve months PE ratio, which stands at 23.7. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Lakeland Industries’ forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
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, Lakeland Industries has a P/S ratio of about 1.2. This is a bit lower than the S&P 500 average, which comes in at 3.3 right now. Also, as we can see in the chart below, this stands a bit below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Lakeland Industries currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Lakeland Industries a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Lakeland Industries is just 1.8, a level that is far lower than the industry average of 2.1. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, LAKE is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Lakeland 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 Score of B and a Momentum Score of D. This gives LAKE a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been quite encouraging as both, the current quarter and full year estimates have seen one upward revision each in the past thirty days, compared to no downward revisions.
This has had a positive impact on the consensus estimate, as the current quarter consensus estimate has risen by 5.6% in a month, while the full year estimate has inched higher by 3.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bullish trend is why the stock sports a Zacks Rank #1 (Strong Buy) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Lakeland Industries is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, this Zacks Rank #1 company enjoys a solid Zacks Industry Rank (among Top 32% of more than 250 industries). In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Image: Bigstock
Should Value Investors Pick Lakeland Industries (LAKE) Stock?
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?
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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 Lakeland Industries, Inc. (LAKE - 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, Lakeland Industries has a trailing twelve months PE ratio of 18.6, 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 stands at about 20.8. While Lakeland Industries’ current PE level puts it above its midpoint of 14.3 over the past five years, it stands well below the highs for the stock, thus indicating scope for entry.
Further, the stock’s PE compares favorably with the Zacks Industrial Products sector’s trailing twelve months PE ratio, which stands at 23.7. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Lakeland Industries’ forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
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, Lakeland Industries has a P/S ratio of about 1.2. This is a bit lower than the S&P 500 average, which comes in at 3.3 right now. Also, as we can see in the chart below, this stands a bit below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Lakeland Industries currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Lakeland Industries a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Lakeland Industries is just 1.8, a level that is far lower than the industry average of 2.1. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, LAKE is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Lakeland 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 Score of B and a Momentum Score of D. This gives LAKE a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been quite encouraging as both, the current quarter and full year estimates have seen one upward revision each in the past thirty days, compared to no downward revisions.
This has had a positive impact on the consensus estimate, as the current quarter consensus estimate has risen by 5.6% in a month, while the full year estimate has inched higher by 3.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Lakeland Industries, Inc. Price and Consensus
Lakeland Industries, Inc. Price and Consensus | Lakeland Industries, Inc. Quote
This bullish trend is why the stock sports a Zacks Rank #1 (Strong Buy) and why we are looking for in-line performance from the company in the near term.
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Bottom Line
Lakeland Industries is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, this Zacks Rank #1 company enjoys a solid Zacks Industry Rank (among Top 32% of more than 250 industries). In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.
See these buy recommendations now >>