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.
Benzinga Insights has compiled a list of value stocks in the basic materials sector that may be worth watching:
- United States Steel (NYSE:X) - P/E: 2.17
- Ero Copper (NYSE:ERO) - P/E: 6.54
- Constellium (NYSE:CSTM) - P/E: 8.95
- Sylvamo (NYSE:SLVM) - P/E: 5.81
- Olin (NYSE:OLN) - P/E: 6.69
United States Steel's earnings per share for Q1 sits at $3.05, whereas in Q4, they were at 3.64. Its most recent dividend yield is at 0.63%, which has decreased by 0.44% from 1.07% in the previous quarter.
This quarter, Ero Copper experienced an increase in earnings per share, which was $0.49 in Q3 and is now $0.65. Constellium saw an increase in earnings per share from 0.06 in Q4 to $1.35 now. Sylvamo has reported Q4 earnings per share at $1.71, which has decreased by 24.67% compared to Q3, which was 2.27. This quarter, Olin experienced an increase in earnings per share, which was $2.41 in Q4 and is now $2.48. Most recently, the company reported a dividend yield of 1.62%, which has increased by 0.17% from last quarter's yield of 1.45%.
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.