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 financial services sector:
- Salisbury Bancorp SAL - P/E: 9.41
- Jefferies Financial Group JEF - P/E: 7.35
- Guild Holdings GHLD - P/E: 1.62
- Village Bank & Trust Finl VBFC - P/E: 7.67
- Summit State Bank SSBI - P/E: 6.34
Salisbury Bancorp has reported Q2 earnings per share at $0.66, which has increased by 6.45% compared to Q1, which was 0.62. Most recently, the company reported a dividend yield of 2.76%, which has increased by 0.4% from last quarter's yield of 2.36%.
This quarter, Jefferies Financial Group experienced a decrease in earnings per share, which was $1.23 in Q1 and is now $0.45. Most recently, the company reported a dividend yield of 4.31%, which has increased by 0.6% from last quarter's yield of 3.71%.
Guild Holdings has reported Q2 earnings per share at $0.23, which has decreased by 56.6% compared to Q1, which was 0.53. This quarter, Village Bank & Trust Finl experienced an increase in earnings per share, which was $1.24 in Q1 and is now $1.48. Its most recent dividend yield is at 1.16%, which has increased by 0.03% from 1.13% in the previous quarter.
Summit State Bank's earnings per share for Q2 sits at $0.67, whereas in Q1, they were at 0.59. The company's most recent dividend yield sits at 3.08%, which has increased by 0.17% from 2.91% 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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