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.
Benzinga Insights has compiled a list of value stocks in the real estate sector that may be worth watching:
- City Office REIT CIO - P/E: 1.04
- Stratus Properties STRS - P/E: 3.39
- Forestar Group FOR - P/E: 3.36
- American Realty Investors ARL - P/E: 5.94
- Arbor Realty Trust ABR - P/E: 6.33
City Office REIT looks to be undervalued. It possesses an EPS of $0.4, which has not changed since last quarter (Q1). Its most recent dividend yield is at 7.09%, which has increased by 0.25% from 6.84% in the previous quarter.
Stratus Properties's earnings per share for Q2 sits at $0.09, whereas in Q1, they were at 0.23. Forestar Group has reported Q3 earnings per share at $0.8, which has decreased by 16.67% compared to Q2, which was 0.96. Most recently, American Realty Investors reported earnings per share at $1.01, whereas in Q1 earnings per share sat at $0.6. This quarter, Arbor Realty Trust experienced a decrease in earnings per share, which was $0.55 in Q1 and is now $0.52. Most recently, the company reported a dividend yield of 9.5%, which has increased by 0.7% from last quarter's yield of 8.8%.
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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