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.
Benzinga Insights has compiled a list of value stocks in the financial services sector that may be worth watching:
- Oppenheimer Hldgs (NYSE:OPY) - P/E: 3.53
- State Street (NYSE:STT) - P/E: 9.85
- Cowen (NASDAQ:COWN) - P/E: 2.86
- SLM (NASDAQ:SLM) - P/E: 7.86
- CapStar Finl Hldgs (NASDAQ:CSTR) - P/E: 9.56
Oppenheimer Hldgs's earnings per share for Q1 sits at $0.69, whereas in Q4, they were at 4.61. This quarter, State Street experienced a decrease in earnings per share, which was $2.0 in Q4 and is now $1.59. Most recently, the company reported a dividend yield of 2.27%, which has decreased by 0.21% from last quarter's yield of 2.48%.
Cowen saw a decrease in earnings per share from 2.77 in Q4 to $1.35 now. Its most recent dividend yield is at 1.94%, which has increased by 0.35% from 1.59% in the previous quarter.
SLM's earnings per share for Q1 sits at $0.46, whereas in Q4, they were at 1.05. The company's most recent dividend yield sits at 2.63%, which has increased by 0.09% from 2.54% last quarter.
CapStar Finl Hldgs has reported Q1 earnings per share at $0.48, which has decreased by 14.29% compared to Q4, which was 0.56. The company's most recent dividend yield sits at 1.9%, which has increased by 0.78% from 1.12% 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.
