What is 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.
Below is a list of notable value stocks in the consumer cyclical sector:
- Ark Restaurants ARKR - P/E: 4.63
- Citi Trends CTRN - P/E: 3.58
- Build-A-Bear Workshop BBW - P/E: 4.65
- WW International WW - P/E: 4.59
- LCI Indus LCII - P/E: 5.12
Ark Restaurants's earnings per share for Q3 sits at $1.46, whereas in Q2, they were at 0.29. The company's most recent dividend yield sits at 2.36%, which has decreased by 0.66% from 3.02% last quarter.
Citi Trends saw a decrease in earnings per share from 0.42 in Q1 to $-0.31 now. Its most recent dividend yield is at 1.35%, which has decreased by 0.27% from 1.62% in the previous quarter.
Build-A-Bear Workshop saw a decrease in earnings per share from 0.89 in Q1 to $0.38 now. This quarter, WW International experienced an increase in earnings per share, which was $-0.06 in Q1 and is now $0.4. This quarter, LCI Indus experienced a decrease in earnings per share, which was $7.71 in Q1 and is now $6.06. The company's most recent dividend yield sits at 3.16%, which has decreased by 0.55% from 3.71% 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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