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 industrials sector:
- Matson (NYSE:MATX) - P/E: 3.86
- Quad/Graphics (NYSE:QUAD) - P/E: 9.34
- Encore Wire (NASDAQ:WIRE) - P/E: 4.0
- Atkore (NYSE:ATKR) - P/E: 6.23
- Eagle Bulk Shipping (NASDAQ:EGLE) - P/E: 5.08
Matson saw an increase in earnings per share from 6.53 in Q3 to $9.39 now. Most recently, the company reported a dividend yield of 1.27%, which has decreased by 0.18% from last quarter's yield of 1.45%.
Most recently, Quad/Graphics reported earnings per share at $0.1, whereas in Q3 earnings per share sat at $0.18. Most recently, the company reported a dividend yield of 12.07%, which has increased by 6.53% from last quarter's yield of 5.54%.
Encore Wire has reported Q4 earnings per share at $6.91, which has decreased by 18.8% compared to Q3, which was 8.51. The company's most recent dividend yield sits at 0.07%, which has increased by 0.01% from 0.06% last quarter.
Atkore's earnings per share for Q1 sits at $4.58, whereas in Q4, they were at 4.39. Most recently, Eagle Bulk Shipping reported earnings per share at $4.28, whereas in Q3 earnings per share sat at $4.52. Most recently, the company reported a dividend yield of 14.69%, which has decreased by 5.44% from last quarter's yield of 20.13%.
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.
