What Defines a Value Stock?

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.

Below is a list of notable value stocks in the healthcare sector:

1. Lexicon Pharmaceuticals LXRX - P/E: 5.68
2. Bio-Rad Laboratories BIO - P/E: 8.03
3. Sanofi SNY - P/E: 9.7
4. Cronos Group CRON - P/E: 2.53
5. Innoviva INVA - P/E: 6.21

Lexicon Pharmaceuticals’s earnings per share for Q2 sits at -0.65, whereas in Q1, they were at -0.63. Lexicon Pharmaceuticals does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Bio-Rad Laboratories has reported Q2 earnings per share at 1.61, which has decreased by 15.71% compared to Q1, which was 1.91. Bio-Rad Laboratories does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Most recently, Sanofi reported earnings per share at 1.41, whereas in Q1 earnings per share sat at 1.8. Sanofi does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Cronos Group’s earnings per share for Q2 sits at -0.19, whereas in Q1, they were at 0.2. Cronos Group does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

Innoviva has reported Q2 earnings per share at 0.69, which has increased by 16.95% compared to Q1, which was 0.59. Innoviva 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.