The Meaning Behind 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.

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

1. New York Community NYCB - P/E: 9.51
2. Fulton Financial FULT - P/E: 9.73
3. National General Holdings NGHC - P/E: 8.74
4. Pathfinder Bancorp PBHC - P/E: 9.4
5. Navient NAVI - P/E: 4.89

New York Community saw an increase in earnings per share from 0.21 in Q2 to 0.23 now. Most recently, the company reported a dividend yield of 7.86%, which has increased by 1.22% from last quarter’s yield of 6.64%.

Fulton Financial saw an increase in earnings per share from 0.24 in Q2 to 0.38 now. Its most recent dividend yield is at 5.65%, which has increased by 0.77% from 4.88% in the previous quarter.

National General Holdings’s earnings per share for Q3 sits at 0.9, whereas in Q2, they were at 1.36. Most recently, the company reported a dividend yield of 0.59%, which has ('', 'not changed') by 0.0% from last quarter’s yield of 0.59%.

Pathfinder Bancorp has reported Q2 earnings per share at 0.31, which has increased by 6.9% compared to Q1, which was 0.29. The company’s most recent dividend yield sits at 2.12%, which has decreased by 0.46% from 2.58% last quarter.

Navient’s earnings per share for Q3 sits at 1.03, whereas in Q2, they were at 0.91. 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.