Back to top

Image: Bigstock

Should Value Investors Buy Lenovo (LNVGY) Stock?

Read MoreHide Full Article

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Lenovo (LNVGY - Free Report) . LNVGY is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 13.28, while its industry has an average P/E of 15.90. Over the last 12 months, LNVGY's Forward P/E has been as high as 20.46 and as low as -45.39, with a median of 14.79.

We also note that LNVGY holds a PEG ratio of 1.66. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LNVGY's PEG compares to its industry's average PEG of 2.12. Over the last 12 months, LNVGY's PEG has been as high as 1.88 and as low as 1.47, with a median of 1.64.

Investors should also recognize that LNVGY has a P/B ratio of 2.50. 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. LNVGY's current P/B looks attractive when compared to its industry's average P/B of 7.03. Over the past year, LNVGY's P/B has been as high as 2.60 and as low as 1.11, with a median of 1.76.

Finally, our model also underscores that LNVGY has a P/CF ratio of 8.31. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. LNVGY's current P/CF looks attractive when compared to its industry's average P/CF of 11.07. LNVGY's P/CF has been as high as 12.11 and as low as 6.06, with a median of 10.11, all within the past year.

These are just a handful of the figures considered in Lenovo's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that LNVGY is an impressive value stock right now.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Lenovo Group Ltd. (LNVGY) - free report >>

Published in