Understanding Value Stocks
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 real estate sector:
- Forestar Group (NYSE:FOR) - P/E: 8.82
- New York Mortgage Trust (NASDAQ:NYMT) - P/E: 7.14
- Comstock Holding Co (NASDAQ:CHCI) - P/E: 2.43
- Dynex Cap (NYSE:DX) - P/E: 3.85
- Chimera Investment (NYSE:CIM) - P/E: 4.62
Forestar Group's earnings per share for Q1 sits at 0.81, whereas in Q4, they were at 0.85. Most recently, New York Mortgage Trust reported earnings per share at 0.1, whereas in Q2 earnings per share sat at 0.11. Its most recent dividend yield is at 10.39%, which has increased by 0.98% from 9.41% in the previous quarter.
Comstock Holding Co's earnings per share for Q3 sits at 0.34, whereas in Q2, they were at 1.29. Dynex Cap saw an increase in earnings per share from 0.51 in Q2 to 0.54 now. Most recently, the company reported a dividend yield of 9.15%, which has increased by 0.09% from last quarter's yield of 9.06%.
Chimera Investment has reported Q3 earnings per share at 0.42, which has decreased by 22.22% compared to Q2, which was 0.54. Most recently, the company reported a dividend yield of 8.45%, which has decreased by 0.42% from last quarter's yield of 8.87%.
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.
