Understanding Value Stocks
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.
Below is a list of notable value stocks in the financial services sector:
- CIT Group (NYSE:CIT) – P/E: 7.21
- Citizens Financial Group (NYSE:CFG) – P/E: 9.56
- CURO Group Holdings (NYSE:CURO) – P/E: 5.09
- 360 DigiTech (NASDAQ:QFIN) – P/E: 4.18
- Rocket Companies (NYSE:RKT) – P/E: 5.7
CIT Group has reported Q3 earnings per share at 1.84, which has decreased by 11.96% compared to Q2, which was 2.09. Its most recent dividend yield is at 2.66%, which has decreased by 0.31% from 2.97% in the previous quarter.
Citizens Financial Group has reported Q3 earnings per share at 1.22, which has decreased by 16.44% compared to Q2, which was 1.46. Most recently, the company reported a dividend yield of 3.18%, which has decreased by 0.61% from last quarter’s yield of 3.79%.
This quarter, CURO Group Holdings experienced a decrease in earnings per share, which was 0.69 in Q1 and is now 0.4. The company’s most recent dividend yield sits at 2.67%, which has decreased by 0.4% from 3.07% last quarter.
This quarter, 360 DigiTech experienced an increase in earnings per share, which was 1.28 in Q1 and is now 1.55. 360 DigiTech does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
Rocket Companies has reported Q2 earnings per share at 0.46, which has decreased by 48.31% compared to Q1, which was 0.89. Rocket Companies does not have a dividend yield, which investors should be aware of when considering holding onto such a stock.
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.