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 utilities sector:
- Hawaiian Electric Indus (NYSE:HE) - P/E: 6.37
- Genie Energy (NYSE:GNE) - P/E: 7.39
- Vistra (NYSE:VST) - P/E: 8.59
- Brookfield Renewable (NYSE:BEPC) - P/E: 7.31
- Pampa Energia (NYSE:PAM) - P/E: 4.48
Hawaiian Electric Indus has been featured as a value stock. Hawaiian Electric Indus's Q2 EPS sits at $0.5, which has not changed since last quarter (Q1). Most recently, the company reported a dividend yield of 3.75%, which has increased by 0.01% from last quarter's yield of 3.74%.
Most recently, Genie Energy reported earnings per share at $0.45, whereas in Q1 earnings per share sat at $0.54. Most recently, the company reported a dividend yield of 2.19%, which has increased by 0.23% from last quarter's yield of 1.96%.
Most recently, Vistra reported earnings per share at $1.17, whereas in Q1 earnings per share sat at $1.71. The company's most recent dividend yield sits at 2.95%, which has decreased by 0.58% from 3.53% last quarter.
Brookfield Renewable has reported Q2 earnings per share at $-0.1, which has decreased by 11.11% compared to Q1, which was -0.09. The company's most recent dividend yield sits at 4.77%, which has increased by 0.58% from 4.19% last quarter.
Pampa Energia's earnings per share for Q2 sits at $3.01, whereas in Q1, they were at 2.56.
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.