The Meaning Behind 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:
- Assured Guaranty (NYSE:AGO) - P/E: 9.29
- Bank Bradesco (NYSE:BBD) - P/E: 8.16
- F N B (NYSE:FNB) - P/E: 9.97
- Bank of America (NYSE:BAC) - P/E: 9.08
- Live Oak Bancshares (NASDAQ:LOB) - P/E: 9.47
Assured Guaranty's earnings per share for Q1 sits at $1.34, whereas in Q4, they were at 3.88. Its most recent dividend yield is at 1.73%, which has decreased by 0.03% from 1.76% in the previous quarter.
Bank Bradesco has reported Q1 earnings per share at $0.64, which has increased by 30.61% compared to Q4, which was 0.49. F N B has reported Q1 earnings per share at $0.26, which has decreased by 13.33% compared to Q4, which was 0.3. The company's most recent dividend yield sits at 3.96%, which has increased by 0.53% from 3.43% last quarter.
Most recently, Bank of America reported earnings per share at $0.8, whereas in Q4 earnings per share sat at $0.82. Its most recent dividend yield is at 2.3%, which has increased by 0.51% from 1.79% in the previous quarter.
Live Oak Bancshares saw an increase in earnings per share from 0.66 in Q4 to $0.76 now. The company's most recent dividend yield sits at 0.32%, which has increased by 0.13% from 0.19% 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.
