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.

Below is a list of notable value stocks in the utilities sector:

1. NRG Energy NRG - P/E: 2.01
2. Central Puerto CEPU - P/E: 3.06
3. Spark Energy SPKE - P/E: 5.94
4. Pampa Energia PAM - P/E: 0.05
5. Cia Paranaense De Energia ELP - P/E: 5.59

NRG Energy saw an increase in earnings per share from 0.49 in Q1 to 1.27 now. Most recently, the company reported a dividend yield of 3.55%, which has decreased by 0.4% from last quarter’s yield of 3.95%.

Most recently, Central Puerto reported earnings per share at 0.02, whereas in Q1 earnings per share sat at 0.01. Central Puerto does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Most recently, Spark Energy reported earnings per share at 0.52, whereas in Q2 earnings per share sat at 0.62. The company’s most recent dividend yield sits at 8.46%, which has decreased by 1.89% from 10.35% last quarter.

Pampa Energia’s earnings per share for Q2 sits at 0.06, whereas in Q1, they were at 0.21. Pampa Energia does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Cia Paranaense De Energia has reported Q2 earnings per share at 1.09, which has increased by 159.52% compared to Q1, which was 0.42. The company’s most recent dividend yield sits at 6.26%, which has increased by 4.11% from 2.15% 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.