Understand value stocks
A value stock has traditionally been priced lower than the stock prices of companies in the same industry. This indicates that the company may be undervalued as investors are not showing that much interest in such companies. The most common way to check value is the price-to-earnings ratio, or P/E. A low P/E ratio is a good indication that the stock is undervalued.
Benzinga Insights has compiled a list of value stocks in the consumer defensive sector that might be worth watching:
- Perdoceo education PRDO – P/E: 9.88
- Brasilagro – Cia bras LND – P/E: 5.75
- Post Hldgs POST – P/E: 6.31
- Amcon sales DIT – P/E: 5.87
- United Natural Foods UNFI – P/E: 9.38
Perdoceo Education’s earnings per share are $0.31 in the fourth quarter, compared to $0.39 in the third quarter. Brasilagro – Cia Bras saw earnings per share fall to now $0.0 from $0.08 in the first quarter. Most recently, Post Hldgs reported earnings per share of $1.08, while fourth-quarter earnings per share were $0.85. Most recently, the company reported a dividend yield of 6.43%, up 0.76% from last quarter’s 5.67% yield.
During the quarter, Amcon Distributing saw its earnings per share decline, which was $7.97 in the fourth quarter and is now $4.46. During the quarter, United Natural Foods saw its earnings per share decline, which was $1.13 in the first quarter and is now $0.78.
The significance: A value stock can take time to recover from its undervalued position. The risk of investing in a value stock is that it may never happen.
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