What Defines a Value Stock?
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.
Below is a list of notable value stocks in the utilities sector:
- Pampa Energia (NYSE:PAM) - P/E: 3.1
- Kenon Hldgs (NYSE:KEN) - P/E: 1.58
- Via Renewables (NASDAQ:VIA) - P/E: 6.43
- Genie Energy (NYSE:GNE) - P/E: 5.45
- NRG Energy (NYSE:NRG) - P/E: 2.3
This quarter, Pampa Energia experienced an increase in earnings per share, which was $0.7 in Q4 and is now $1.79. Kenon Hldgs saw an increase in earnings per share from 7.28 in Q4 to $11.86 now. Via Renewables's earnings per share for Q1 sits at $0.7, whereas in Q4, they were at -0.96. Its most recent dividend yield is at 9.15%, which has increased by 2.88% from 6.27% in the previous quarter.
Most recently, Genie Energy reported earnings per share at $0.67, whereas in Q4 earnings per share sat at $1.12. Its most recent dividend yield is at 4.72%, which has decreased by 0.95% from 5.67% in the previous quarter.
NRG Energy's earnings per share for Q1 sits at $7.17, whereas in Q4, they were at -1.74. Most recently, the company reported a dividend yield of 3.53%, which has decreased by 0.1% from last quarter's yield of 3.63%.
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.
