What is 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.
The following stocks are considered to be notable value stocks in the real estate sector:
- Ellington Residential (NYSE:EARN) – P/E: 7.52
- Piedmont Office Realty (NYSE:PDM) – P/E: 9.12
- Optibase (NASDAQ:OBAS) – P/E: 9.09
- Equity Commonwealth (NYSE:EQC) – P/E: 7.94
- Brandywine Realty Trust (NYSE:BDN) – P/E: 6.67
This quarter, Ellington Residential experienced a decrease in earnings per share, which was 0.39 in Q3 and is now 0.34. Most recently, the company reported a dividend yield of 9.11%, which has decreased by 0.7% from last quarter’s yield of 9.81%.
Most recently, Piedmont Office Realty reported earnings per share at 0.46, whereas in Q3 earnings per share sat at 0.48. The company’s most recent dividend yield sits at 5.38%, which has decreased by 1.54% from 6.92% last quarter.
Optibase has reported Q3 earnings per share at 1.0, which has increased by 194.12% compared to Q2, which was 0.34. Optibase does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Equity Commonwealth’s earnings per share for Q4 sits at 0.0, whereas in Q3, they were at 0.03. Equity Commonwealth does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Brandywine Realty Trust’s earnings per share for Q4 sits at 0.36, whereas in Q3, they were at 0.35. Most recently, the company reported a dividend yield of 6.48%, which has decreased by 0.58% from last quarter’s yield of 7.06%.
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.