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Is L Brands (LB) a Great Value Stock Right Now?

Zacks Equity Research
·2-min read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 L Brands (LB). LB is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 13.69 right now. For comparison, its industry sports an average P/E of 25.66. Over the past 52 weeks, LB's Forward P/E has been as high as 36.86 and as low as 6.69, with a median of 16.41.

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We also note that LB holds a PEG ratio of 1.05. 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. LB's PEG compares to its industry's average PEG of 2.08. Over the last 12 months, LB's PEG has been as high as 2.84 and as low as 0.51, with a median of 1.26.

Value investors will likely look at more than just these metrics, but the above data helps show that L Brands is likely undervalued currently. And when considering the strength of its earnings outlook, LB sticks out at as one of the market's strongest value stocks.


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Zacks Investment Research