Understanding 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.
Below is a list of notable value stocks in the consumer defensive sector:
- Natures Sunshine Products NATR - P/E: 9.79
- Gravitas Education GEHI - P/E: 3.0
- Lifevantage LFVN - P/E: 5.86
- Sanderson Farms SAFM - P/E: 5.48
- DAVIDsTEA DTEA - P/E: 0.61
This quarter, Natures Sunshine Products experienced a decrease in earnings per share, which was $0.68 in Q4 and is now $-0.03. Most recently, the company reported a dividend yield of 4.12%, which has increased by 1.22% from last quarter's yield of 2.9%.
Gravitas Education has reported Q4 earnings per share at $0.05, which has increased by 183.33% compared to Q3, which was -0.06. Lifevantage's earnings per share for Q3 sits at $0.12, whereas in Q2, they were at 0.05. Sanderson Farms has reported Q2 earnings per share at $14.39, which has increased by 66.55% compared to Q1, which was 8.64. Most recently, the company reported a dividend yield of 0.92%, which has decreased by 0.01% from last quarter's yield of 0.93%.
DAVIDsTEA's earnings per share for Q1 sits at $-0.04, whereas in Q4, they were at 0.06.
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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