With solid inorganic growth strategies, Legg Mason appears a solid bet now. Further, the company's focus on expanding product offerings for its customers bodes well for the long term.
Moreover, positive growth prospects and robust fundamentals make this Zacks Rank #2 (Buy) stock a wise investment option.
Over the last 30 days, the Zacks Consensus Estimate for fiscal 2020 and fiscal 2021 moved up marginally and 3.1%, respectively.
Shares of Legg Mason have gained 22.1% in the past six months, as against the 20.2% decline recorded by the industry.
There are also a number of other aspects which make the stock an attractive investment option.
4 Reasons Why Legg Mason is a Must Buy
Revenue Strength: Organic growth remains a key strength at Legg Mason, as suggested by its revenue growth story. Though operating revenues declined in the first three months of fiscal 2020, the figure demonstrated a 3% improvement at a CAGR, over the last four years (ended fiscal 2019).
The company’s projected sales growth (F1/F0) of 0.2% (against the nil industry average) indicates constant upward momentum in revenues.
Strategic Acquisitions: Legg Mason has expanded primarily via acquisitions, with majority of its assets under management (AUM) growth being driven by the same. These acquisitions have significantly diversified its product offerings and expanded the company’s market share globally. These investments were in line with its long-term strategy focused on providing investors with choices across investment capability, product and vehicle, and distribution.
Stock Looks Undervalued: The stock currently has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Strong Leverage: Legg Mason’s debt/equity ratio is 0.61 compared with the S&P 500 average of 0.72, displaying low debt burden relatively. It highlights the financial stability of the company even in an unstable economic environment.
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