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 communication services sector:
- Altice USA (NYSE:ATUS) - P/E: 3.44
- JOYY (NASDAQ:YY) - P/E: 5.31
- Nexstar Media Group (NASDAQ:NXST) - P/E: 8.19
- Cumulus Media (NASDAQ:CMLS) - P/E: 4.02
- Lizhi (NASDAQ:LIZI) - P/E: 5.99
Most recently, Altice USA reported earnings per share at $0.19, whereas in Q2 earnings per share sat at $0.23. Most recently, the company reported a dividend yield of 10.8%, which has increased by 10.8% from last quarter's yield of 0.0%.
This quarter, JOYY experienced an increase in earnings per share, which was $0.65 in Q2 and is now $0.96. The company's most recent dividend yield sits at 7.52%, which has increased by 1.23% from 6.29% last quarter.
Nexstar Media Group has reported Q3 earnings per share at $6.24, which has increased by 12.23% compared to Q2, which was 5.56. Most recently, the company reported a dividend yield of 2.75%, which has increased by 0.73% from last quarter's yield of 2.02%.
This quarter, Cumulus Media experienced an increase in earnings per share, which was $0.34 in Q2 and is now $0.45. Lizhi has been featured as a value stock. Lizhi's Q3 EPS sits at $0.07, which has not changed since last quarter (Q2).
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.