The Meaning Behind 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.
The following stocks are considered to be notable value stocks in the consumer defensive sector:
- Perdoceo Education (NASDAQ:PRDO) – P/E: 6.95
- Seneca Foods (NASDAQ:SENEA) – P/E: 7.63
- Seneca Foods (NASDAQ:SENEB) – P/E: 7.61
- Lincoln Educational Servs (NASDAQ:LINC) – P/E: 7.36
- RYB Education (NYSE:RYB) – P/E: 6.04
This quarter, Perdoceo Education experienced a decrease in earnings per share, which was $0.45 in Q3 and is now $0.4. Seneca Foods saw an increase in earnings per share from 1.31 in Q2 to $2.14 now. Most recently, Seneca Foods reported earnings per share at $2.14, whereas in Q2 earnings per share sat at $1.31. Lincoln Educational Servs saw an increase in earnings per share from 0.11 in Q3 to $0.73 now. Most recently, RYB Education reported earnings per share at $-0.06, whereas in Q2 earnings per share sat at $0.23.
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.