Understanding 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 utilities sector:
- Genie Energy (NYSE:GNE) - P/E: 7.27
- Pampa Energia (NYSE:PAM) - P/E: 4.56
- Brookfield Renewable (NYSE:BEPC) - P/E: 7.1
- Smart Powerr (NASDAQ:CREG) - P/E: 2.89
- Kenon Hldgs (NYSE:KEN) - P/E: 3.52
Genie Energy's earnings per share for Q4 sits at $1.12, whereas in Q3, they were at 0.16. Most recently, the company reported a dividend yield of 5.67%, which has increased by 1.77% from last quarter's yield of 3.9%.
Pampa Energia saw a decrease in earnings per share from 2.36 in Q3 to $0.7 now. Brookfield Renewable has reported Q4 earnings per share at $-0.12, which has increased by 42.86% compared to Q3, which was -0.21. 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, Smart Powerr experienced an increase in earnings per share, which was $-0.16 in Q2 and is now $-0.08. Kenon Hldgs saw an increase in earnings per share from 3.45 in Q3 to $7.28 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.
