Legg Mason, Inc. (LM): This Global Asset Management Firm is Cheap

Peer Comparison

Currently, Legg Mason is trading at $27.60 per share, with a total market cap of $3.56 billion. Legg Mason is considered the smallest company compared to its other peers, including BlackRock, Inc. (NYSE:BLK) and Charles Schwab Corp (NYSE:SCHW). Blackrock is the biggest company, with a total market cap of $41.77 billion, while Charles Schwab is worth $21.4 billion. Among the three, Legg Mason seems to be the cheapest with 12.95x forward earnings and 0.73x book value. At the current trading price of $243.80 per share, BlackRock is valued at nearly 14x forward P/E and 1.69x book value. Charles Schwab has the most expensive valuations, at 19.3x forward earnings and 2.51x book value. BlackRock has a much higher amount of AUM Legg Mason does, at $3.79 trillion in the fourth quarter of 2012. Among the three, Charles Schwab is paying the lowest dividend yield at 1.4%, while the dividend yields of Legg Mason and BlackRock are 1.6% and 2.8%, respectively.

Foolish Bottom Line

Legg Mason seems to be quite cheap in both absolute and relative valuation measures. It is trading at 30% discount to the book value and it has the cheapest valuation among its peers. As the new but experienced CEO commits to turning the business around, I think Legg Mason’s stock price might be driven higher in the near future.

The article This Global Asset Management Firm is Cheap originally appeared on Fool.com and is written by Anh HOANG.

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