What Defines a Value Stock?
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 industrials sector:
- EuroDry EDRY - P/E: 3.39
- Encore Wire WIRE - P/E: 6.33
- Advanced Emissions Solns ADES - P/E: 2.23
- Costamare CMRE - P/E: 5.2
- KNOT Offshore Partners KNOP - P/E: 8.98
EuroDry saw an increase in earnings per share from 2.76 in Q2 to 3.79 now. Encore Wire saw a decrease in earnings per share from 8.82 in Q2 to 8.51 now. Most recently, the company reported a dividend yield of 0.06%, which has decreased by 0.03% from last quarter's yield of 0.09%.
Advanced Emissions Solns has reported Q3 earnings per share at 1.16, which has increased by 28.89% compared to Q2, which was 0.9. Its most recent dividend yield is at 8.48%, which has increased by 0.64% from 7.84% in the previous quarter.
Most recently, Costamare reported earnings per share at 0.66, whereas in Q2 earnings per share sat at 0.47. The company's most recent dividend yield sits at 2.97%, which has decreased by 0.93% from 3.9% last quarter.
KNOT Offshore Partners has reported Q3 earnings per share at 0.41, which has decreased by 26.79% compared to Q2, which was 0.56. Its most recent dividend yield is at 10.42%, which has decreased by 0.06% from 10.48% in the previous quarter.
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.
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