Should value investors buy LSI Industries (LYTS) shares?

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 monitoring the latest trends in value, growth and momentum to find strong companies for our readers.

Looking at the history of these trends, arguably none is more popular than value investing. This strategy simply aims to identify companies that are undervalued by the broader market. Value investors use a variety of methods, including tried-and-tested 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. Value investors will naturally be most interested in the “Value” category of the system. Stocks with an “A” grade for Value and high Zacks Ranks are among the best value stocks available at any given time.

A stock to keep an eye on is LSI Industries (LYTS)LYTS currently carries a Zacks Rank of #2 (Buy) and an A grade for Value.

LYTS also has a PEG ratio of 0.40. This popular number is similar to the widely used P/E ratio, but it also takes into account a company’s expected EPS growth rate. LYTS’s PEG compares to its industry’s average PEG of 1.05. Over the past year, LYTS’s PEG has ranged between 0.44 and 0.34, with the median being 0.38.

Value investors also love the P/S ratio, which is calculated by simply dividing the stock price by the company’s revenue. Some people prefer this metric because revenue is harder to manipulate on an income statement, meaning it may be a truer indicator of performance. LYTS has a P/S ratio of 0.72. In comparison, its industry’s average P/S ratio is 0.98.

These numbers are just a few of the metrics that value investors often look at, but they show that LSI Industries is likely undervalued right now. Considering that and the strong earnings outlook, LYTS seems like a great value stock right now.

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