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.
The following stocks are considered to be notable value stocks in the utilities sector:
- Energy Co of Minas Gerais CIG – P/E: 7.42
- Genie Energy GNE – P/E: 6.98
- Smart Powerr CREG – P/E: 2.21
- Kenon Hldgs KEN – P/E: 3.12
- OGE Energy OGE – P/E: 8.05
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. The company’s most recent dividend yield sits at 0.84%, which has decreased by 5.63% from 6.47% last quarter.
Genie Energy’s earnings per share for Q1 sits at $0.67, whereas in Q4, they were at 1.12. The company’s most recent dividend yield sits at 4.72%, which has decreased by 0.95% from 5.67% last quarter.
This quarter, Smart Powerr experienced an increase in earnings per share, which was $-0.16 in Q2 and is now $-0.08. This quarter, Kenon Hldgs experienced an increase in earnings per share, which was $3.45 in Q3 and is now $7.28. Most recently, OGE Energy reported earnings per share at $1.39, whereas in Q4 earnings per share sat at $0.27. The company’s most recent dividend yield sits at 4.56%, which has decreased by 0.22% from 4.78% last quarter.
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.