InvestorsObserver gives Lam Research Corporation (LRCX) a strong valuation score of 83 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. LRCX currently holds a better value than 83% 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.
Metrics Analysis
LRCX has a trailing twelve month Price to Earnings (PE) ratio of 29.3. The historical average of roughly 15 shows a poor value for LRCX stock as investors are paying higher share prices relative to the company's earnings. LRCX's high trailing PE ratio shows that the firm has been trading above its fair market value recently. Its trailing 12-month earnings per share (EPS) of 17.61 does not justify the stock's current price. However, trailing PE ratios do not factor in the company's projected growth rate, resulting in many newer firms having high PE ratios due to high growth potential enticing investors despite inadequate earnings.
LRCX has a 12 month forward PE to Growth (PEG) ratio of 1.39. Markets are undervaluing LRCX in relation to its projected growth as its PEG ratio is currently below the fair market value of 1. 17.6100006's PEG comes from its forward price to earnings ratio being divided by its growth rate. PEG ratios are one of the most used valuation metrics due to its incorporation of more company fundamentals metrics and a focus on the firm's future rather than its past.
Summary
LRCX's valuation metrics are weak at its current price due to a overvalued PEG ratio despite strong growth. LRCX's PE and PEG are worse than the market average resulting in a below average valuation score.
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