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 financial services sector:
- Apollo Investment (NASDAQ:AINV) - P/E: 6.38
- ChoiceOne Finl Servs (NASDAQ:COFS) - P/E: 9.69
- Umpqua Holdings (NASDAQ:UMPQ) - P/E: 8.94
- Eagle Point Credit Co (NYSE:ECC) - P/E: 2.07
- LM Funding America (NASDAQ:LMFA) - P/E: 1.7
Apollo Investment saw a decrease in earnings per share from 0.39 in Q1 to 0.33 now. Most recently, ChoiceOne Finl Servs reported earnings per share at 0.75, whereas in Q2 earnings per share sat at 0.65. Most recently, the company reported a dividend yield of 3.94%, which has decreased by 0.21% from last quarter's yield of 4.15%.
Umpqua Holdings's earnings per share for Q3 sits at 0.49, whereas in Q2, they were at 0.53. Most recently, the company reported a dividend yield of 3.94%, which has decreased by 0.29% from last quarter's yield of 4.23%.
Most recently, Eagle Point Credit Co reported earnings per share at 0.39, whereas in Q2 earnings per share sat at 0.32. Its most recent dividend yield is at 9.88%, which has ('', 'not changed') by 0.0% from 9.88% in the previous quarter.
LM Funding America's earnings per share for Q3 sits at -1.01, whereas in Q2, they were at 2.05.
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.
