Understanding Value Stocks

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. First Western Financial MYFW - P/E: 7.77
2. First Internet INBK - P/E: 6.89
3. Genworth Finl GNW - P/E: 7.17
4. Oak Valley OVLY - P/E: 9.72
5. Navient NAVI - P/E: 5.9

First Western Financial’s earnings per share for Q2 sits at 1.13, whereas in Q1, they were at 0.22. First Western Financial does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

First Internet’s earnings per share for Q2 sits at 0.4, whereas in Q1, they were at 0.62. Its most recent dividend yield is at 1.42%, which has decreased by 0.13% from 1.55% in the previous quarter.

This quarter, Genworth Finl experienced a decrease in earnings per share, which was 0.07 in Q1 and is now -0.04. Genworth Finl does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Oak Valley saw a decrease in earnings per share from 0.33 in Q1 to 0.32 now. Most recently, the company reported a dividend yield of 2.3%, which has increased by 0.81% from last quarter’s yield of 1.49%.

Navient’s earnings per share for Q2 sits at 0.91, whereas in Q1, they were at 0.51. Most recently, the company reported a dividend yield of 7.57%, which has decreased by 1.44% from last quarter’s yield of 9.01%.

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.