What are 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 consumer cyclical sector:
- Children's Place (NASDAQ:PLCE) - P/E: 4.13
- Ford Motor (NYSE:F) - P/E: 3.52
- Hovnanian Enterprises (NYSE:HOV) - P/E: 0.58
- LightInTheBox Holding (NYSE:LITB) - P/E: 9.33
- Tempur Sealy Intl (NYSE:TPX) - P/E: 9.3
Most recently, Children's Place reported earnings per share at $3.02, whereas in Q3 earnings per share sat at $5.43. Most recently, the company reported a dividend yield of 3.17%, which has increased by 0.3% from last quarter's yield of 2.87%.
This quarter, Ford Motor experienced a decrease in earnings per share, which was $0.51 in Q3 and is now $0.26. Its most recent dividend yield is at 2.6%, which has increased by 0.96% from 1.64% in the previous quarter.
Hovnanian Enterprises saw a decrease in earnings per share from 7.41 in Q4 to $3.07 now. LightInTheBox Holding's earnings per share for Q4 sits at $0.07, whereas in Q3, they were at -0.05. Tempur Sealy Intl has been featured as a value stock. Tempur Sealy Intl's Q4 EPS sits at $0.88, which has not changed since last quarter (Q3). Its most recent dividend yield is at 1.07%, which has increased by 0.3% from 0.77% 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.
