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 healthcare sector:
- Fonar FONR - P/E: 9.13
- PainReform PRFX - P/E: 3.5
- Cigna CI - P/E: 9.72
- Collegium Pharmaceutical COLL - P/E: 7.13
- Select Medical Holdings SEM - P/E: 9.22
Most recently, Fonar reported earnings per share at 0.55, whereas in Q4 earnings per share sat at 0.1. PainReform has reported Q3 earnings per share at -0.18, which has increased by 30.77% compared to Q2, which was -0.26. Cigna saw an increase in earnings per share from 5.24 in Q2 to 5.73 now. The company's most recent dividend yield sits at 1.85%, which has increased by 0.1% from 1.75% last quarter.
This quarter, Collegium Pharmaceutical experienced a decrease in earnings per share, which was 0.27 in Q2 and is now 0.22. Select Medical Holdings saw a decrease in earnings per share from 1.22 in Q2 to 0.57 now. The company's most recent dividend yield sits at 1.48%, which has increased by 0.22% from 1.26% last 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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