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 industrials sector:

1. Navios Maritime Container NMCI - P/E: 2.2
2. L.B. Foster FSTR - P/E: 3.89
3. Eastern Co EML - P/E: 7.25
4. WESCO International WCC - P/E: 8.41
5. Capital Product Partners CPLP - P/E: 5.77

Navios Maritime Container’s earnings per share for Q2 sits at -0.06, whereas in Q1, they were at 0.14. Navios Maritime Container does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

L.B. Foster has reported Q1 earnings per share at -0.18, which has decreased by 325.0% compared to Q4, which was 0.08. Most recently, the company reported a dividend yield of 1.57%, which has increased by 0.18% from last quarter’s yield of 1.39%.

Most recently, Eastern Co reported earnings per share at 0.46, whereas in Q4 earnings per share sat at 0.79. Most recently, the company reported a dividend yield of 2.44%, which has increased by 0.88% from last quarter’s yield of 1.56%.

Most recently, WESCO International reported earnings per share at 0.91, whereas in Q4 earnings per share sat at 1.32. WESCO International does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Capital Product Partners saw an increase in earnings per share from 0.31 in Q4 to 0.35 now. Most recently, the company reported a dividend yield of 14.04%, which has increased by 3.34% from last quarter’s yield of 10.7%.

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.