5 Value Stocks In The Financial Services Sector

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:

1. Randolph Bancorp RNDB - P/E: 5.28
2. Hilltop Holdings HTH - P/E: 8.2
3. Heritage Global HGBL - P/E: 10.0
4. Orrstown Finl Servs ORRF - P/E: 9.6
5. PennyMac Financial Servs PFSI - P/E: 3.13

Randolph Bancorp has reported Q4 earnings per share at 1.06, which has decreased by 47.26% compared to Q3, which was 2.01. Randolph Bancorp does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

This quarter, Hilltop Holdings experienced a decrease in earnings per share, which was 1.69 in Q3 and is now 1.3. Most recently, the company reported a dividend yield of 1.53%, which has decreased by 0.09% from last quarter's yield of 1.62%.

This quarter, Heritage Global experienced an increase in earnings per share, which was 0.04 in Q3 and is now 0.17. Heritage Global does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Orrstown Finl Servs saw an increase in earnings per share from 0.57 in Q3 to 0.91 now. The company's most recent dividend yield sits at 4.09%, which has decreased by 0.97% from 5.06% last quarter.

Most recently, PennyMac Financial Servs reported earnings per share at 5.97, whereas in Q3 earnings per share sat at 7.03. Its most recent dividend yield is at 1.27%, which has increased by 0.19% from 1.08% 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.