NEW YORK (
-- Legg Mason
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income increased by 37.2% when compared to the same quarter one year prior, rising from $44.92 million to $61.62 million.
- LEGG MASON INC has improved earnings per share by 46.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, LEGG MASON INC turned its bottom line around by earning $1.32 versus -$13.95 in the prior year. This year, the market expects an improvement in earnings ($1.64 versus $1.32).
- LM's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LM has a quick ratio of 2.49, which demonstrates the ability of the company to cover short-term liquidity needs.
- LM's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 3.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
Legg Mason, Inc. operates as an asset management firm serving individual and institutional investors worldwide. The company has a P/E ratio of 23.3, above the average financial services industry P/E ratio of 23.1 and above the S&P 500 P/E ratio of 16.7. Legg Mason has a market cap of $5.7 billion and is part of the
industry. Shares are down 0.6% year to date as of the close of trading on Monday.
You can view the full
or get investment ideas from our