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Market Overview

Overview Of Value Stocks In The Consumer Cyclical Sector

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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 consumer cyclical sector:

  1. Group 1 Automotive (NYSE:GPI) - P/E: 9.52
  2. PulteGroup (NYSE:PHM) - P/E: 9.36
  3. Meritage Homes (NYSE:MTH) - P/E: 8.89
  4. TravelCenters Of America (NASDAQ:TA) - P/E: 7.61
  5. TRI Pointe Group (NYSE:TPH) - P/E: 8.29

Group 1 Automotive has reported Q3 earnings per share at 6.97, which has increased by 84.88% compared to Q2, which was 3.77. Most recently, the company reported a dividend yield of 0.99%, which has decreased by 0.23% from last quarter's yield of 1.22%.

PulteGroup saw an increase in earnings per share from 1.15 in Q2 to 1.34 now. Its most recent dividend yield is at 1.35%, which has increased by 0.24% from 1.11% in the previous quarter.

This quarter, Meritage Homes experienced an increase in earnings per share, which was 2.38 in Q2 and is now 2.84. Meritage Homes does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Most recently, TravelCenters Of America reported earnings per share at 0.65, whereas in Q2 earnings per share sat at 0.59. TravelCenters Of America does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

This quarter, TRI Pointe Group experienced an increase in earnings per share, which was 0.51 in Q2 and is now 0.63. Its most recent dividend yield is at 0.78%, which has increased by 0.09% from 0.69% in the previous 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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