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.

The following stocks are considered to be notable value stocks in the healthcare sector:

1. Satsuma Pharmaceuticals STSA - P/E: 2.34
2. Acorda Therapeutics ACOR - P/E: 0.69
3. Biogen BIIB - P/E: 8.05
4. Amneal Pharmaceuticals AMRX - P/E: 9.13
5. Bio-Rad Laboratories BIO - P/E: 4.88

This quarter, Satsuma Pharmaceuticals experienced a decrease in earnings per share, which was -0.65 in Q2 and is now -0.69. Satsuma Pharmaceuticals does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Most recently, Acorda Therapeutics reported earnings per share at -0.23, whereas in Q2 earnings per share sat at -0.35. Acorda Therapeutics does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Biogen’s earnings per share for Q3 sits at 8.84, whereas in Q2, they were at 10.26. Biogen does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Most recently, Amneal Pharmaceuticals reported earnings per share at 0.16, whereas in Q2 earnings per share sat at 0.13. Amneal Pharmaceuticals does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

This quarter, Bio-Rad Laboratories experienced an increase in earnings per share, which was 1.61 in Q2 and is now 3.0. Bio-Rad Laboratories does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

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.