What Defines a Value Stock?
A value stock is traditionally defined in terms of how investors in the marketplace are valuing that company's future growth prospects. Low P/E multiples are good base indicators that the company is undervalued and can most likely be labelled as a value stock.
The following stocks are considered to be notable value stocks in the consumer cyclical sector:
- Honda Motor Co (NYSE:HMC) - P/E: 7.46
- Allison Transmission (NYSE:ALSN) - P/E: 9.77
- Charles & Colvard (NASDAQ:CTHR) - P/E: 4.69
- Urban Outfitters (NASDAQ:URBN) - P/E: 8.17
- Superior Gr of Cos (NASDAQ:SGC) - P/E: 9.74
Most recently, Honda Motor Co reported earnings per share at $0.99, whereas in Q2 earnings per share sat at $0.88. The company's most recent dividend yield sits at 6.63%, which has increased by 3.25% from 3.38% last quarter.
Allison Transmission's earnings per share for Q4 sits at $1.15, whereas in Q3, they were at 0.89. The company's most recent dividend yield sits at 2.13%, which has decreased by 0.09% from 2.22% last quarter.
Charles & Colvard has reported Q2 earnings per share at $0.04, which has increased by 33.33% compared to Q1, which was 0.03. Urban Outfitters's earnings per share for Q4 sits at $0.41, whereas in Q3, they were at 0.89. This quarter, Superior Gr of Cos experienced a decrease in earnings per share, which was $0.51 in Q3 and is now $0.3. Its most recent dividend yield is at 2.43%, which has increased by 0.52% from 1.91% 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.
