Back to top

Should Value Investors Buy LPL Financial (LPLA) 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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is LPL Financial (LPLA - Free Report) . LPLA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. LPLA has a P/S ratio of 1.31. This compares to its industry's average P/S of 1.45.

Finally, our model also underscores that LPLA has a P/CF ratio of 11.10. 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. LPLA's current P/CF looks attractive when compared to its industry's average P/CF of 21.41. LPLA's P/CF has been as high as 16.17 and as low as 8.90, with a median of 11.22, all within the past year.

These are just a handful of the figures considered in LPL Financial'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 LPLA 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:


LPL Financial Holdings Inc. (LPLA) - free report >>

Published in