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 consumer defensive sector:
- China Online Education Gr COE – P/E: 3.19
- Herbalife Nutrition HLF – P/E: 6.47
- Pilgrims Pride PPC – P/E: 8.17
- Mannatech MTEX – P/E: 6.33
- Bridgford Foods BRID – P/E: 3.52
This quarter, China Online Education Gr experienced an increase in earnings per share, which was $-0.94 in Q1 and is now $-0.67. Herbalife Nutrition has reported Q2 earnings per share at $0.96, which has decreased by 3.03% compared to Q1, which was 0.99. Its most recent dividend yield is at 1.71%, which has decreased by 1.82% from 3.53% in the previous quarter.
Pilgrims Pride has reported Q2 earnings per share at $1.54, which has increased by 30.51% compared to Q1, which was 1.18. Most recently, Mannatech reported earnings per share at $0.34, whereas in Q1 earnings per share sat at $0.06. Its most recent dividend yield is at 3.2%, which has decreased by 0.01% from 3.21% in the previous quarter.
Bridgford Foods has reported Q3 earnings per share at $0.04, which has increased by 144.44% compared to Q2, which was -0.09.
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.