The Meaning of Value Stocks
A value stock traditionally has a lower price than stocks of companies in the same industry. This indicates that the company may be undervalued because investors are not showing as much interest in these companies. The most common way to check value is through the price/earnings multiple, or P/E. A low P/E multiple is a good indication that the stock is undervalued.
Benzinga Insights has compiled a list of value stocks in the financial services sector that may be worth watching:
- OptimumBank Hldgs OPHC – PER: 2.58
- Itau Corpbanca ITCB – PER: 4.27
- HBT Finland HBT – PER: 9.74
- Flagstar Bancorp CFB – PER: 5.14
- German Bank comics – PER: 8.24
Most recently, OptimumBank Hldgs reported earnings per share of $0.16, while first quarter earnings per share were $0.17. Itau Corpbanca saw its earnings per share fall from 0.22 in the first quarter to $0.25 currently. The company’s most recent dividend yield sits at 5.56%, up 4.8% from 0.76% last quarter.
HBT Finl’s earnings per share for Q3 sits at $0.55, while in Q2 it was $0.48. Its most recent dividend yield is 3.68%, up 0.14% from 3.54% in the previous quarter.
Flagstar Bancorp’s earnings per share for Q3 came in at $1.41, while in Q2 it was 1.17. Most recently, the company announced a dividend yield of 0.73%, up 0.08% from last quarter’s 0.65% yield.
This quarter, Deutsche Bank saw an increase in earnings per share, which was $0.35 in Q2 and is now $0.57.
Importance: A valuable security may need some time to rebound from its undervalued position. The risk of investing in a value stock is that this emergence never materializes.