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.
Benzinga Insights has compiled a list of value stocks in the financial services sector that may be worth watching:
- First American Financial FAF - P/E: 5.57
- CrossFirst Bankshares CFB - P/E: 8.96
- First Foundation FFWM - P/E: 7.29
- Noah Holdings NOAH - P/E: 5.51
- Grupo Aval Acciones AVAL - P/E: 3.9
First American Financial's earnings per share for Q2 sits at $1.97, whereas in Q1, they were at 1.17. The company's most recent dividend yield sits at 3.67%, which has increased by 0.3% from 3.37% last quarter.
CrossFirst Bankshares has reported Q2 earnings per share at $0.31, which has decreased by 6.06% compared to Q1, which was 0.33. First Foundation saw an increase in earnings per share from 0.55 in Q1 to $0.59 now. Its most recent dividend yield is at 2.18%, which has increased by 0.32% from 1.86% in the previous quarter.
Most recently, Noah Holdings reported earnings per share at $0.79, whereas in Q1 earnings per share sat at $0.73. Grupo Aval Acciones has reported Q2 earnings per share at $0.15, which has decreased by 62.5% compared to Q1, which was 0.4. Its most recent dividend yield is at 80.36%, which has increased by 76.01% from 4.35% 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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