What are Value Stocks?
A value stock traditionally has a lower price when compared to stock prices of companies in the same industry. This indicates that the company may be undervalued, as investors are not expressing as much interest in such companies. The most commonly used way to check for value is with the price-to-earnings multiple, or P/E. A low P/E multiple is a good indication that the stock is undervalued.
The following stocks are considered to be notable value stocks in the financial services sector:
- Stewart Information Servs (NYSE:STC) – P/E: 7.53
- Cincinnati Financial (NASDAQ:CINF) – P/E: 6.3
- Barings BDC (NYSE:BBDC) – P/E: 3.75
- Tiptree (NASDAQ:TIPT) – P/E: 6.32
- US Global Investors (NASDAQ:GROW) – P/E: 2.72
Stewart Information Servs saw a decrease in earnings per share from 2.09 in Q4 to 1.92 now. Its most recent dividend yield is at 2.8%, which has decreased by 0.07% from 2.87% in the previous quarter.
Most recently, Cincinnati Financial reported earnings per share at 1.37, whereas in Q4 earnings per share sat at 1.61. Most recently, the company reported a dividend yield of 2.09%, which has decreased by 0.85% from last quarter’s yield of 2.94%.
Most recently, Barings BDC reported earnings per share at 0.22, whereas in Q4 earnings per share sat at 0.19. The company’s most recent dividend yield sits at 7.72%, which has decreased by 0.56% from 8.28% last quarter.
This quarter, Tiptree experienced an increase in earnings per share, which was 0.4 in Q4 and is now 0.81. The company’s most recent dividend yield sits at 1.7%, which has decreased by 1.16% from 2.86% last quarter.
US Global Investors has reported Q3 earnings per share at 0.94, which has decreased by 14.55% compared to Q2, which was 1.1. Most recently, the company reported a dividend yield of 0.76%, which has (”, ‘not changed’) by 0.0% from last quarter’s yield of 0.76%.
The Significance: A value stock may need some time to rebound from its undervalued position. The risk of investing in a value stock is that this emergence may never materialize.