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 financial services sector that may be worth watching:

1. Hope Bancorp HOPE - P/E: 6.86
2. CNB Financial CCNE - P/E: 5.97
3. PennyMac Financial Servs PFSI - P/E: 5.07
4. Fulton Financial FULT - P/E: 8.63
5. Mid Penn Bancorp MPB - P/E: 7.45

This quarter, Hope Bancorp experienced an increase in earnings per share, which was 0.21 in Q1 and is now 0.22. The company’s most recent dividend yield sits at 6.64%, which has increased by 0.32% from 6.32% last quarter.

CNB Financial saw a decrease in earnings per share from 0.58 in Q1 to 0.56 now. Most recently, the company reported a dividend yield of 3.82%, which has decreased by 0.43% from last quarter’s yield of 4.25%.

PennyMac Financial Servs has reported Q2 earnings per share at 4.39, which has increased by 17.69% compared to Q1, which was 3.73. The company’s most recent dividend yield sits at 1.2%, which has decreased by 0.52% from 1.72% last quarter.

Fulton Financial’s earnings per share for Q2 sits at 0.24, whereas in Q1, they were at 0.16. Its most recent dividend yield is at 5.65%, which has increased by 0.77% from 4.88% in the previous quarter.

Mid Penn Bancorp saw an increase in earnings per share from 0.45 in Q1 to 0.81 now. Most recently, the company reported a dividend yield of 4.02%, which has decreased by 0.28% from last quarter’s yield of 4.3%.

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.