What are Value Stocks?
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.
Below is a list of notable value stocks in the consumer cyclical sector:
- Flexsteel Industries (NASDAQ:FLXS) – P/E: 7.4
- China Automotive Systems (NASDAQ:CAAS) – P/E: 3.8
- PENN Entertainment (NASDAQ:PENN) – P/E: 5.05
- Group 1 Automotive (NYSE:GPI) – P/E: 5.56
- KB Home (NYSE:KBH) – P/E: 6.07
Flexsteel Industries’s earnings per share for Q4 sits at $0.36, whereas in Q3, they were at 0.28. The company’s most recent dividend yield sits at 3.08%, which has decreased by 0.07% from 3.15% last quarter.
China Automotive Systems saw an increase in earnings per share from 0.23 in Q1 to $0.35 now. PENN Entertainment’s earnings per share for Q2 sits at $0.48, whereas in Q1, they were at 0.44. Group 1 Automotive’s earnings per share for Q2 sits at $11.73, whereas in Q1, they were at 10.93. Its most recent dividend yield is at 0.69%, which has decreased by 0.14% from 0.83% in the previous quarter.
KB Home saw a decrease in earnings per share from 1.94 in Q2 to $1.8 now. Most recently, the company reported a dividend yield of 1.51%, which has increased by 0.04% from last quarter’s yield of 1.47%.
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.
