Understanding 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 labeled as a value stock.

Benzinga Insights has compiled a list of value stocks in the financial services sector that may be worth watching:

1. First BanCorp FBP - P/E: 9.93
2. Ameriprise Financial AMP - P/E: 5.83
3. QCR Holdings QCRH - P/E: 8.36
4. First Horizon National FHN - P/E: 8.58
5. Sterling Bancorp SBT - P/E: 3.1

First BanCorp saw a decrease in earnings per share from 0.190 in Q4 to -0.030 now. The company’s most recent dividend yield sits at 3.8%, which has increased by 1.71% from 2.09% last quarter.

Ameriprise Financial saw an increase in earnings per share from 4.200 in Q4 to 5.410 now. The company’s most recent dividend yield sits at 3.76%, which has increased by 1.41% from 2.35% last quarter.

QCR Holdings has reported Q1 earnings per share at 0.770, which has decreased by 19.79% compared to Q4, which was 0.960. Its most recent dividend yield is at 0.86%, which has increased by 0.3% from 0.56% in the previous quarter.

This quarter, First Horizon National experienced an increase in earnings per share, which was 0.050 in Q1 and is now 0.200. The company’s most recent dividend yield sits at 6.67%, which has increased by 2.99% from 3.68% last quarter.

Sterling Bancorp saw a decrease in earnings per share from 0.280 in Q4 to -0.560 now. The company’s most recent dividend yield sits at 0.55%, which has increased by 0.14% from 0.41% last quarter.

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.