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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.
The following stocks are considered to be notable value stocks in the healthcare sector:
- Novartis (NYSE:NVS) - P/E: 8.4
- Talkspace (NASDAQ:TALK) - P/E: 1.43
- Organon (NYSE:OGN) - P/E: 7.14
- BioNTech (NASDAQ:BNTX) - P/E: 3.45
- Moderna (NASDAQ:MRNA) - P/E: 5.21
Most recently, Novartis reported earnings per share at $1.56, whereas in Q1 earnings per share sat at $1.46. The company's most recent dividend yield sits at 2.54%, which has increased by 0.3% from 2.24% last quarter.
Talkspace's earnings per share for Q2 sits at $-0.15, whereas in Q1, they were at -0.13. Organon's earnings per share for Q2 sits at $1.25, whereas in Q1, they were at 1.65. Most recently, the company reported a dividend yield of 3.44%, which has increased by 0.07% from last quarter's yield of 3.37%.
BioNTech saw a decrease in earnings per share from 15.97 in Q1 to $6.87 now. Moderna's earnings per share for Q2 sits at $5.24, whereas in Q1, they were at 8.58.
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.