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 Lifetime Brands, Inc. ( LCUT Quick Quote LCUT - 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, Lifetime Brands has a trailing twelve months PE ratio of 22.75, 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 24.65. If we focus on the long-term PE trend, Lifetime Brands’ current PE level puts it above its midpoint over the past five years. Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 27.38. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers. We should also point out that Lifetime Brands has a forward PE ratio (price relative to this year’s earnings) of just 14.51, so it is fair to say that a slightly more value-oriented path may be ahead for Lifetime Brands 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, Lifetime Brands has a P/S ratio of about 0.30. This is significantly lower than the S&P 500 average, which comes in at 4.38 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years. If anything, LCUT is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms. Broad Value Outlook
In aggregate, Lifetime Brands currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Lifetime Brands a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Lifetime Brands is 1.12, a level that is lower than the industry average of 2.04. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 2.69, which is far better than the industry average of 10.92. Clearly, LCUT is a solid choice on the value front from multiple angles. What About the Stock Overall?
Though Lifetime Brands 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 C. This gives LCUT 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 been mixed at best. The current year has seen no estimate revisions in the past sixty days, while the next year estimate has seen one upward and zero downward revisions in the same time period. As a result, the current year consensus estimate has been unchanged in the past two months, while the next year estimate has increased 16.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Despite this somewhat mixed trend, the stock has a Zacks Rank #1 (Strong Buy) on the back of its strong value metrics and this is why we are expecting outperformance from the company in the near-term.
Lifetime Brands is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 19%) and a solid Zacks Rank instills investor confidence.
However, it is hard to get too excited about this company overall as over the past two years, the industry has underperformed the broader market, as you can see below: So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick. Zacks’ 2020 Election Stock Report:
In addition to the companies you learned about above, we invite you to learn more about profiting from the upcoming presidential election. Trillions of dollars will shift into new market sectors after the votes are tallied, and investors could see significant gains. This report reveals specific stocks that could soar: 6 if Trump wins, 6 if Biden wins.
Check out the 2020 Election Stock Report >>