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 financial services sector:

1. Oak Valley OVLY - P/E: 9.47
2. MMA Capital Management MMAC - P/E: 2.01
3. PCB Bancorp PCB - P/E: 8.63
4. LCNB LCNB - P/E: 9.68
5. First Business Financial FBIZ - P/E: 7.75

Oak Valley has reported Q2 earnings per share at 0.32, which has decreased by 3.03% compared to Q1, which was 0.33. The company’s most recent dividend yield sits at 2.3%, which has increased by 0.81% from 1.49% last quarter.

MMA Capital Management saw an increase in earnings per share from -0.53 in Q1 to -0.27 now. MMA Capital Management does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.

PCB Bancorp saw a decrease in earnings per share from 0.23 in Q1 to 0.22 now. The company’s most recent dividend yield sits at 4.1%, which has decreased by 0.78% from 4.88% last quarter.

LCNB has been featured as a value stock. LCNB's Q2 EPS sits at 0.39, which has not changed since last quarter (Q1). Most recently, the company reported a dividend yield of 4.88%, which has decreased by 0.78% from last quarter’s yield of 5.66%.

First Business Financial has been featured as a value stock. First Business Financial's Q2 EPS sits at 0.38, which has not changed since last quarter (Q1). Most recently, the company reported a dividend yield of 4.48%, which has increased by 0.05% from last quarter’s yield of 4.43%.

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.