What is a Value Stock?
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.
Below is a list of notable value stocks in the utilities sector:
- NRG Energy (NYSE:NRG) - P/E: 3.89
- Energy Co of Minas Gerais (NYSE:CIG) - P/E: 6.13
- Companhia De Saneamento (NYSE:SBS) - P/E: 9.96
- Kenon Hldgs (NYSE:KEN) - P/E: 4.45
- Pampa Energia (NYSE:PAM) - P/E: 2.95
This quarter, NRG Energy experienced an increase in earnings per share, which was 4.4 in Q2 and is now 6.6. Most recently, the company reported a dividend yield of 3.63%, which has increased by 0.5% from last quarter's yield of 3.13%.
This quarter, Energy Co of Minas Gerais experienced a decrease in earnings per share, which was 0.22 in Q2 and is now 0.05. Companhia De Saneamento saw a decrease in earnings per share from 0.21 in Q2 to 0.13 now. Most recently, the company reported a dividend yield of 2.94%, which has decreased by 0.83% from last quarter's yield of 3.77%.
Kenon Hldgs has reported Q3 earnings per share at 3.45, which has increased by 7.81% compared to Q2, which was 3.2. Pampa Energia saw an increase in earnings per share from 1.94 in Q2 to 2.36 now.
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.
