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Is Lakeland Industries (LAKE) a Suitable Value Pick Now?

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Lakeland Industries, Inc. LAKE stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

P/E Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Lakeland has a trailing twelve months PE ratio of 18.38, as you can see in the chart below:



Again, this level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.17. If we focus on the long-term PE trend, LAKE’s current PE level puts it above its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.



Further, the stock’s PE compares favorably with the Zacks categorized Industrial Products sector’s trailing twelve months PE ratio, which stands at 22.52. This indicates that the stock is significantly undervalued right now, compared to its peers.


However, we should also point out that Lakeland has a forward PE ratio (price relative to this year’s earnings) of 16.45, so it is fair to say that a slightly more value-oriented path may be ahead for Apple stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Lakeland has a P/S ratio of about 1.17. This is lower than the industry average, which comes in at 3.13 right now.


If anything, this suggests some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, Lakeland currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This is because some of its other key metrics are favorable.

For example, the PEG ratio for LAKE is 1.64, a level that is lower than the industry average of 1.87. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, it’s P/B (used to compare a stock's market value to its book value) stands at 1.30, lower than the industry average of 2.95. Clearly, LAKE is a solid choice on the value front from multiple angles.

What About the Stock Overall?

There are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘C’. This gives LAKE a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been encouraging as both the current year and next have seen one upward estimate revision in the past sixty days compared to none downward.

As a result, the current year consensus estimate has risen by 9.2% in the past two months, while the full year estimate has inched higher by 3.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Lakeland Industries, Inc. Price and Consensus

This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.

Bottom Line

Lakeland is an inspired choice for value investors, as it is hard to beat its good lineup of statistics on this front. Boasting a good industry rank (top 30%) and a top Zacks Rank, the company deserves attention right now.  In fact, over the past three months, the Zacks Protection-Safety Equipment & Services industry has clearly outperformed the broader market, as you can see below:

 


So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.

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