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 communication services sector that may be worth watching:

1. Sinclair Broadcast Group SBGI - P/E: 4.77
2. Gray Television GTN - P/E: 8.74
3. AMC Networks AMCX - P/E: 5.99
4. 58.com WUBA - P/E: 6.24
5. CenturyLink CTL - P/E: 9.42

Sinclair Broadcast Group’s earnings per share for Q2 sits at 3.21, whereas in Q1, they were at 1.53. Its most recent dividend yield is at 3.73%, which has decreased by 1.47% from 5.2% in the previous quarter.

Gray Television saw a decrease in earnings per share from 0.43 in Q1 to -0.02 now. Gray Television does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Most recently, AMC Networks reported earnings per share at 2.39, whereas in Q1 earnings per share sat at 1.47. AMC Networks does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

58.com saw an increase in earnings per share from 1.03 in Q4 to 2.09 now. 58.com does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

CenturyLink has reported Q2 earnings per share at 0.42, which has increased by 13.51% compared to Q1, which was 0.37. The company’s most recent dividend yield sits at 8.86%, which has decreased by 1.58% from 10.44% 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.