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 healthcare sector:
- Walgreens Boots Alliance (NASDAQ:WBA) - P/E: 6.55
- eFFECTOR Therapeutics (NASDAQ:EFTR) - P/E: 8.0
- Ironwood Pharmaceuticals (NASDAQ:IRWD) - P/E: 3.84
- Cross Country Healthcare (NASDAQ:CCRN) - P/E: 5.67
- Quest Diagnostics (NYSE:DGX) - P/E: 8.74
This quarter, Walgreens Boots Alliance experienced a decrease in earnings per share, which was $1.68 in Q1 and is now $1.59. The company's most recent dividend yield sits at 3.84%, which has decreased by 0.14% from 3.98% last quarter.
Most recently, eFFECTOR Therapeutics reported earnings per share at $0.44, whereas in Q3 earnings per share sat at $0.42. This quarter, Ironwood Pharmaceuticals experienced a decrease in earnings per share, which was $0.33 in Q3 and is now $0.27. Cross Country Healthcare saw an increase in earnings per share from 0.61 in Q3 to $1.4 now. Quest Diagnostics saw a decrease in earnings per share from 3.96 in Q3 to $3.33 now. Most recently, the company reported a dividend yield of 1.94%, which has increased by 0.26% from last quarter's yield of 1.68%.
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.
