Is China Life Insurance Co Ltd ADR (LFC) Stock Over or Undervalued?

Friday, August 12, 2022 09:52 AM | InvestorsObserver Analysts

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InvestorsObserver gives China Life Insurance Co Ltd ADR (LFC) a strong valuation score of 78 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. LFC currently holds a better value than 78% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.

LFC gets a 78 Valuation Rank today. Find out what this means to you and get the rest of the rankings on LFC!
See Full LFC Report

Metrics Analysis

LFC's trailing-12-month Price to Earnings (PE) ratio of 5.3 puts it below the historical average of roughly 15. LFC is a good value at its current trading price as investors are paying less than what its worth in relation to the company's earnings. LFC's trailing-12-month earnings per share (EPS) of 0.28 does justify what it is currently trading at in the market. Trailing PE ratios, however, do not factor in a company's projected growth rate, resulting in some firms having high PE ratios due to high growth potentially enticing investors even if current earnings are low.
LFC's 12-month-forward PE to Growth (PEG) ratio of 0.71 is considered a good value as the market is undervaluing LFC in relation to the company's projected earnings growth. LFC's PEG comes from its forward price to earnings ratio being divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and share price. Due to their incorporation of more fundamentals of a company's overall health and focusing on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.

Summary

All together these valuation metrics paint a pretty strong picture for LFC at its current price due to a undervalued PEG ratio due to strong growth. The PE and PEG for LFC are better than the average of the market resulting in a valuation score of 78. Click Here to get the full Report on China Life Insurance Co Ltd ADR (LFC) stock.

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