What is 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 labelled as a value stock.
The following stocks are considered to be notable value stocks in the consumer cyclical sector:
- Steven Madden (NASDAQ:SHOO) - P/E: 9.22
- Container Store Group (NYSE:TCS) - P/E: 3.99
- Rave Restaurant Gr (NASDAQ:RAVE) - P/E: 9.23
- Goodyear Tire & Rubber (NASDAQ:GT) - P/E: 3.77
- Liquidity Services (NASDAQ:LQDT) - P/E: 8.68
Steven Madden has reported Q2 earnings per share at $0.63, which has decreased by 31.52% compared to Q1, which was 0.92. The company's most recent dividend yield sits at 2.51%, which has increased by 0.52% from 1.99% last quarter.
Container Store Group saw a decrease in earnings per share from 0.46 in Q4 to $0.21 now. Most recently, Rave Restaurant Gr reported earnings per share at $0.03, whereas in Q2 earnings per share sat at $0.02. Most recently, Goodyear Tire & Rubber reported earnings per share at $0.46, whereas in Q1 earnings per share sat at $0.37. The company's most recent dividend yield sits at 4.27%, which has decreased by 0.52% from 4.79% last quarter.
Liquidity Services's earnings per share for Q3 sits at $0.21, whereas in Q2, they were at 0.17.
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.