What Defines 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:
- Energy Co of Minas Gerais (NYSE:CIG) - P/E: 7.79
- Pampa Energia (NYSE:PAM) - P/E: 3.87
- Brookfield Renewable (NYSE:BEPC) - P/E: 6.46
- Vidler Water Resources (NASDAQ:VWTR) - P/E: 8.73
- NRG Energy (NYSE:NRG) - P/E: 4.15
Most recently, Energy Co of Minas Gerais reported earnings per share at $0.05, whereas in Q2 earnings per share sat at $0.22. Its most recent dividend yield is at 0.84%, which has decreased by 5.63% from 6.47% in the previous quarter.
Pampa Energia saw a decrease in earnings per share from 2.36 in Q3 to $0.7 now. Brookfield Renewable saw an increase in earnings per share from -0.21 in Q3 to $-0.12 now. Most recently, the company reported a dividend yield of 3.8%, which has increased by 0.9% from last quarter's yield of 2.9%.
This quarter, Vidler Water Resources experienced an increase in earnings per share, which was $-0.06 in Q3 and is now $1.85. This quarter, NRG Energy experienced a decrease in earnings per share, which was $6.6 in Q3 and is now $-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.
