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.
The following stocks are considered to be notable value stocks in the financial services sector:
- American River Bankshares AMRB - P/E: 8.64
- Union Bankshares UNB - P/E: 8.98
- Southern First Bancshares SFST - P/E: 8.28
- Mid Penn Bancorp MPB - P/E: 7.49
- Colony Bankcorp CBAN - P/E: 9.96
This quarter, American River Bankshares experienced an increase in earnings per share, which was 0.24 in Q1 and is now 0.3. The company’s most recent dividend yield sits at 2.62%, which has decreased by 0.13% from 2.75% last quarter.
Most recently, Union Bankshares reported earnings per share at 0.6, whereas in Q1 earnings per share sat at 0.49. Its most recent dividend yield is at 7.39%, which has increased by 2.35% from 5.04% in the previous quarter.
Most recently, Southern First Bancshares reported earnings per share at 0.6, whereas in Q1 earnings per share sat at 0.36. Southern First Bancshares does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Mid Penn Bancorp saw an increase in earnings per share from 0.45 in Q1 to 0.81 now. Most recently, the company reported a dividend yield of 4.02%, which has decreased by 0.28% from last quarter’s yield of 4.3%.
Colony Bankcorp saw an increase in earnings per share from 0.17 in Q1 to 0.25 now. Most recently, the company reported a dividend yield of 3.67%, which has decreased by 0.3% from last quarter’s yield of 3.97%.
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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