What are 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.
Below is a list of notable value stocks in the utilities sector:
- Energy Co of Minas Gerais (NYSE:CIG) - P/E: 5.85
- Suburban Propane Partners (NYSE:SPH) - P/E: 8.72
- UGI (NYSE:UGI) - P/E: 7.65
- Kenon Hldgs (NYSE:KEN) - P/E: 4.49
- NRG Energy (NYSE:NRG) - P/E: 3.74
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. Suburban Propane Partners saw an increase in earnings per share from -0.19 in Q4 to $0.34 now. Its most recent dividend yield is at 8.49%, which has increased by 0.35% from 8.14% in the previous quarter.
UGI's earnings per share for Q1 sits at $0.93, whereas in Q4, they were at -0.34. Its most recent dividend yield is at 3.01%, which has decreased by 0.04% from 3.05% in the previous quarter.
Kenon Hldgs saw an increase in earnings per share from 3.2 in Q2 to $3.45 now. NRG Energy saw an increase in earnings per share from 4.4 in Q2 to $6.6 now. 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%.
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.
