Legg Mason Inc Attractive Valuation

Legg Mason, Inc.

with its favorable combination of positive flow injection, above average margin improvement and continued capital management and attractive valuation could be a good long term position. In a research note, Citi writes, "We are fine tuning lower our EPS to reflect calendar quarter marks and a modestly lower view on flows. Our F2Q11 (Sep) operating EPS remains unchanged at $0.40, but we lower our F2011-13 view from $1.75/$2.55/$3.37 to $1.72/$2.50/$3.31. In turn, our calendarized 2010-12 operating EPS estimates are $1.64, $2.37, and $3.11, respectively, while our fiscal adjusted EPS estimates are $2.98, $3.83, and $4.66.Expect management to reinforce the flow story is stabilizing. We expect the flow optics to be weak for LM, but this is mostly known, in our view, given recent management commentary. However, if we are right, and they beat, the flow picture is improving and they reiterate the integration remains on pace and continue to focus on buyback/tactical deals, the stock should move higher, particularly as we believe consensus estimates are materially low. We also expect improved flow disclosure to be a catalyst." LM is currently trading at $30.78