Is Leidos (LDOS) Stock Undervalued Right Now?

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.

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

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Leidos (LDOS). LDOS 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 13.62. This compares to its industry's average Forward P/E of 25.96. Over the past year, LDOS's Forward P/E has been as high as 20.34 and as low as 12.02, with a median of 15.86.

Investors will also notice that LDOS has a PEG ratio of 1.84. 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. LDOS's PEG compares to its industry's average PEG of 2.03. Within the past year, LDOS's PEG has been as high as 1.98 and as low as 0.85, with a median of 1.48.

Another valuation metric that we should highlight is LDOS's P/B ratio of 4.47. The P/B is a method of comparing a stock's market value to 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 5.67. Over the past year, LDOS's P/B has been as high as 5.76 and as low as 3.79, with a median of 4.51.

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. LDOS has a P/S ratio of 1.12. This compares to its industry's average P/S of 2.14.

Finally, we should also recognize that LDOS has a P/CF ratio of 12.06. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. LDOS's P/CF compares to its industry's average P/CF of 35.20. Over the past 52 weeks, LDOS's P/CF has been as high as 18.38 and as low as 10.73, with a median of 14.69.

These are only a few of the key metrics included in Leidos's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, LDOS looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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