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.

Benzinga Insights has compiled a list of value stocks in the financial services sector that may be worth watching:

1. First Midwest Bancorp FMBI - P/E: 9.18
2. First Savings Financial FSFG - P/E: 4.95
3. PennyMac Financial Servs PFSI - P/E: 5.05
4. BrightSphere Investment BSIG - P/E: 6.07
5. ING Groep ING - P/E: 9.76

This quarter, First Midwest Bancorp experienced a decrease in earnings per share, which was 0.22 in Q1 and is now 0.19. Most recently, the company reported a dividend yield of 4.46%, which has decreased by 0.19% from last quarter’s yield of 4.65%.

Most recently, First Savings Financial reported earnings per share at 6.51, whereas in Q2 earnings per share sat at -0.26. Most recently, the company reported a dividend yield of 1.55%, which has decreased by 0.11% from last quarter’s yield of 1.66%.

PennyMac Financial Servs’s earnings per share for Q2 sits at 4.39, whereas in Q1, they were at 3.73. Its most recent dividend yield is at 1.2%, which has decreased by 0.52% from 1.72% in the previous quarter.

BrightSphere Investment saw an increase in earnings per share from 0.4 in Q1 to 0.41 now. The company’s most recent dividend yield sits at 0.29%, which has decreased by 0.26% from 0.55% last quarter.

This quarter, ING Groep experienced a decrease in earnings per share, which was 0.19 in Q1 and is now 0.09. The company’s most recent dividend yield sits at 4.32%, which has decreased by 1.6% from 5.92% last quarter.

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.