JANUS HENDERSON GROUP PLC (NYSE:JHG) Presents a Compelling Value Investment Case

For investors looking for chances where the market price may not fully show a company's true worth, a disciplined value investing method can be a useful guide. This approach, made famous by Benjamin Graham and Warren Buffett, focuses on finding stocks selling for less than their calculated value, often indicated by good fundamentals combined with a low price. One way to find such companies is by searching for firms with good financial condition and earnings, but priced lower by the market. A recent search for "decent value" stocks, which looks for a high valuation score together with good scores in health, earnings, and growth, has highlighted JANUS HENDERSON GROUP PLC (NYSE:JHG) for more review.

Valuation: The Center of the Chance

The main attraction for a value investor is a stock's price compared to its financial numbers. Janus Henderson makes a good argument here, receiving a strong Valuation Rating of 7 out of 10 from ChartMill. This score comes from several important signs that imply the stock is selling at a fair, if not low, price.

• Price-to-Earnings (P/E) Ratio: At 11.69, JHG's P/E ratio is much lower than the S&P 500 average of 26.43. It is also priced lower than about 62% of similar companies in the capital markets industry.
• Forward P/E Ratio: The future-looking number of 10.42 further supports the valuation argument, trading at a lower price than both the wider market and most of its industry rivals.
• Enterprise Value to EBITDA: This ratio, which includes debt, shows a "rather cheap valuation," with JHG being less costly than more than 94% of its industry peers.

For a value investor, these numbers are important. They give a numerical base for the idea that the current market price may not completely represent the company's earnings ability, creating a possible margin of safety, a buffer between price and estimated true value.

Financial Health: A Solid Base

A low price by itself is not enough reason to invest; the company must also be in good financial shape to handle economic changes. This is where the "margin of safety" idea is backed by basic strength. Janus Henderson does well here, having an excellent Financial Health Rating of 8.

• Strong Balance Sheet: The company keeps a very low Debt/Equity ratio of 0.08, showing little use of debt financing and doing better than almost 80% of its industry.
• Very Good Liquidity: With a Current Ratio and Quick Ratio both at 4.02, JHG has more than enough resources to meet its short-term bills, putting it in the best group of its sector for liquidity.
• Debt Coverage: Its Debt to Free Cash Flow ratio of 0.62 is very good, meaning it could pay off all its debt with less than a year's cash flow.

This good financial condition lowers risk for the value investor. It implies the company is not a "value trap," a stock that seems cheap but has hidden financial problems, but instead a financially strong business.

Earnings and Growth: The Driver for Value to Appear

For the stock's price to finally show its true value, the company must be able to produce and increase profits. Janus Henderson's scores here are acceptable, with an Earnings score of 6 and a Growth score of 5.

Earnings is supported by returns that look good compared to the industry. Its Return on Invested Capital (ROIC) of 7.82% does better than over 81% of peers and has gotten better from its three-year average. While profit margins have faced some recent reduction, the company has been steadily profitable with positive cash flow from operations over the last five years.

Growth shows a varied but getting better situation. Even though revenue went down over the past year, the long-term pattern and future guesses point to a good direction.

• Earnings Per Share (EPS) increased by a strong 17.02% in the last year.
• Experts think EPS growth will average 9.19% each year moving forward, a speed-up from the past multi-year pattern.
• Revenue growth is also predicted to speed up to nearly 5% per year.

For the value investor, lasting earnings confirms the business model is working, while believable growth possibilities give a reason for the market to price the stock higher over time, reducing the difference between price and value.

A Pick for the Value-Centered Portfolio

Putting these parts together, Janus Henderson Group seems to match several important value investing ideas. It trades at a clear discount to the market and its own industry based on normal earnings measures. This discount exists together with a very strong balance sheet with high liquidity and low debt, giving that important margin of safety against error or economic drops. Also, the company is profitable and is predicted to give moderate earnings growth, which could work as the driver for future price increases.

It is key to remember that value appearing often needs patience, as undervalued stocks can stay unpopular for long times. However, for investors steady in looking for quality businesses at fair prices, JHG's basic profile deserves more study.

The review of JHG is based on its detailed Fundamental Analysis Report, which separates these scores across five key areas.

Find More Possible Value Chances The "Decent Value" search that found Janus Henderson is made to filter for stocks with appealing valuations and good basic fundamentals. If this method fits your investment plan, you can review the current search results and change the rules to find other possible picks here.

Disclaimer: This article is for information only and does not make financial advice, a suggestion, or an offer or request to buy or sell any securities. The review shown is based on data and scores given by ChartMill and should not be the only base for any investment choice. Investing in stocks includes risk, including the possible loss of the amount invested. Always do your own complete research and think about talking with a qualified financial advisor before making any investment choices.