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Is Lloyds Banking Group (LYG) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Lloyds Banking Group (LYG - Free Report) . LYG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 4.72. This compares to its industry's average Forward P/E of 6.94. LYG's Forward P/E has been as high as 6.62 and as low as 4.72, with a median of 5.57, all within the past year.

Investors should also note that LYG holds a PEG ratio of 0.41. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LYG's PEG compares to its industry's average PEG of 0.57. LYG's PEG has been as high as 5.26 and as low as 0.16, with a median of 0.91, all within the past year.

We should also highlight that LYG has a P/B ratio of 0.58. 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 1.42. Over the past year, LYG's P/B has been as high as 0.74 and as low as 0.49, with a median of 0.65.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. LYG has a P/S ratio of 1.02. This compares to its industry's average P/S of 1.26.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Lloyds Banking Group is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LYG feels like a great value stock at the moment.

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