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.
The following stocks are considered to be notable value stocks in the consumer defensive sector:
- Perdoceo Education (NASDAQ:PRDO) - P/E: 7.41
- Mannatech (NASDAQ:MTEX) - P/E: 7.72
- Sanderson Farms (NASDAQ:SAFM) - P/E: 6.56
- Natural Alternatives Intl (NASDAQ:NAII) - P/E: 7.25
- Lincoln Educational Servs (NASDAQ:LINC) - P/E: 6.88
Perdoceo Education saw a decrease in earnings per share from 0.45 in Q3 to $0.4 now. Mannatech saw a decrease in earnings per share from 1.44 in Q3 to $1.25 now. Most recently, the company reported a dividend yield of 2.32%, which has increased by 0.22% from last quarter's yield of 2.1%.
This quarter, Sanderson Farms experienced an increase in earnings per share, which was $8.24 in Q4 and is now $8.64. Its most recent dividend yield is at 0.93%, which has increased by 0.01% from 0.92% in the previous quarter.
Natural Alternatives Intl's earnings per share for Q2 sits at $0.3, whereas in Q1, they were at 0.51. Lincoln Educational Servs's earnings per share for Q4 sits at $0.73, whereas in Q3, they were at 0.11.
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.
