The Meaning Behind Value Stocks

A value stock is traditionally defined in terms of how investors in the marketplace are valuing that company's future growth prospects. Low P/E multiples are good base indicators that the company is undervalued and can most likely be labelled as a value stock.

Benzinga Insights has compiled a list of value stocks in the financial services sector that may be worth watching:

1. Penns Woods Bancorp (NASDAQ:PWOD) - P/E: 9.47
2. QCR Hldgs (NASDAQ:QCRH) - P/E: 8.32
3. MGIC Investment (NYSE:MTG) - P/E: 5.82
4. First Mid Bancshares (NASDAQ:FMBH) - P/E: 9.82
5. X Financial (NYSE:XYF) - P/E: 0.98

This quarter, Penns Woods Bancorp experienced an increase in earnings per share, which was $0.61 in Q2 and is now $0.77. The company's most recent dividend yield sits at 5.33%, which has decreased by 0.3% from 5.63% last quarter.

QCR Hldgs has reported Q3 earnings per share at $1.69, which has decreased by 2.31% compared to Q2, which was 1.73. The company's most recent dividend yield sits at 0.39%, which has decreased by 0.07% from 0.46% last quarter.

MGIC Investment has reported Q3 earnings per share at $0.86, which has increased by 6.17% compared to Q2, which was 0.81. Its most recent dividend yield is at 3.06%, which has increased by 0.16% from 2.9% in the previous quarter.

First Mid Bancshares looks to be undervalued. It possesses an EPS of $0.9, which has not changed since last quarter (Q2). The company's most recent dividend yield sits at 2.56%, which has increased by 0.16% from 2.4% last quarter.

This quarter, X Financial experienced an increase in earnings per share, which was $0.43 in Q1 and is now $0.56.

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.