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.
Below is a list of notable value stocks in the real estate sector:
- Manhattan Bridge Capital LOAN - P/E: 9.41
- Great Ajax AJX - P/E: 8.65
- Tremont Mortgage TRMT - P/E: 3.85
- Kimco Realty KIM - P/E: 4.54
- Hunt Cos Finance Trust HCFT - P/E: 9.46
Manhattan Bridge Capital’s earnings per share for Q3 sits at 0.12, whereas in Q2, they were at 0.11. The company’s most recent dividend yield sits at 9.41%, which has decreased by 0.37% from 9.78% last quarter.
This quarter, Great Ajax experienced a decrease in earnings per share, which was 0.27 in Q2 and is now 0.23. Most recently, the company reported a dividend yield of 8.6%, which has increased by 0.8% from last quarter’s yield of 7.8%.
This quarter, Tremont Mortgage experienced an increase in earnings per share, which was 0.3 in Q2 and is now 0.33. The company’s most recent dividend yield sits at 1.42%, which has increased by 0.01% from 1.41% last quarter.
Kimco Realty has reported Q3 earnings per share at 0.25, which has increased by 4.17% compared to Q2, which was 0.24. The company’s most recent dividend yield sits at 3.34%, which has decreased by 2.24% from 5.58% last quarter.
Hunt Cos Finance Trust has reported Q3 earnings per share at 0.11, which has increased by 22.22% compared to Q2, which was 0.09. The company’s most recent dividend yield sits at 14.35%, which has increased by 2.94% from 11.41% 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.
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