What Defines a Value Stock?
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 healthcare sector:
- QuidelOrtho (NASDAQ:QDEL) - P/E: 5.42
- Vaccitech (NASDAQ:VACC) - P/E: 8.74
- Avid Bioservices (NASDAQ:CDMO) - P/E: 9.68
- Palisade Bio (NASDAQ:PALI) - P/E: 0.18
- ProPhase Labs (NASDAQ:PRPH) - P/E: 4.94
Most recently, QuidelOrtho reported earnings per share at $1.85, whereas in Q2 earnings per share sat at $2.34. This quarter, Vaccitech experienced a decrease in earnings per share, which was $0.41 in Q2 and is now $0.22. Avid Bioservices has reported Q2 earnings per share at $-0.03, which has decreased by 160.0% compared to Q1, which was 0.05. Palisade Bio saw an increase in earnings per share from -6.0 in Q2 to $-4.0 now. Most recently, ProPhase Labs reported earnings per share at $0.06, whereas in Q2 earnings per share sat at $0.4.
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.