MORRISVILLE – China technology stocks are taking a big hit as the tariff and trade dispute with the United States drags on, but Lenovo is running counter to the trend.
Shares in the tech giant, which operates dual headquarters in Beijing and Morrisville, trade on the Hong Kong stock exchange. And on Friday its shares climbed another 2 percent, improving to $15.41 in US dollars from a low of $14.48 on Monday.
Giving Lenovo a boost are analysts at Zacks. The Wall Street analyst firm says Lenovo, which trades under the symbol LNVGY in US dollars, “feels like a great value stock at the moment.”
The tech conglomerate, which is the wold’s No. 1 seller of PCs, recently reported strong earnings and is strengthening its hold on the world’s supercomputer market. It’s capitalizing on what chair and CEO Yang Yuanqing calls an “intelligent transformation” strategy, driving new initiatives across multiple fronts such as Internet of Things, new servers and a digital data center initiative at its Triangle-based server business group, and a rebounding Motorola smartphone business.
Despite having most of its operations based in China, Lenovo also has escaped the scrutiny directed at such China tech firms as Huawei.
Zacks is noticing the trend of good news.
“One company value investors might notice is Lenovo (LNVGY). LNVGY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value,” Zacks reported Thursday.
“The stock has a Forward P/E [profit, earnings] ratio of 9.21. This compares to its industry’s average Forward P/E of 15.16. Over the last 12 months, LNVGY’s Forward P/E has been as high as 20.46 and as low as 8.90, with a median of 14.40.
“LNVGY is also sporting a PEG [price/earnings to growth] ratio of 1.66. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. LNVGY’s PEG compares to its industry’s average PEG of 1.73. Over the last 12 months, LNVGY’s PEG has been as high as 1.88 and as low as 1.47, with a median of 1.64.
“Finally, investors will want to recognize that LNVGY has a P/CF [price to cash flow] ratio of 6.62. This metric takes into account a company’s operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock’s P/CF looks attractive against its industry’s average P/CF of 11.22. LNVGY’s P/CF has been as high as 12.11 and as low as 6.06, with a median of 8.18, all within the past year.”
So what’s the conclusion?
“These figures are just a handful of the metrics value investors tend to look at, but they help show that Lenovo is likely being undervalued right now,” Zacks says.
“Considering this, as well as the strength of its earnings outlook, LNVGY feels like a great value stock at the moment.”