What is a Value Stock?

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 consumer cyclical sector:

1. International Paper IP - P/E: 7.35
2. Destination XL Group DXLG - P/E: 4.22
3. Murphy USA MUSA - P/E: 8.7
4. FGI Industries FGI - P/E: 4.26
5. Ethan Allen Interiors ETD - P/E: 6.09

International Paper's earnings per share for Q4 sits at $0.87, whereas in Q3, they were at 1.01. Most recently, the company reported a dividend yield of 5.0%, which has decreased by 0.86% from last quarter's yield of 5.86%.

This quarter, Destination XL Group experienced a decrease in earnings per share, which was $0.32 in Q2 and is now $0.16. Murphy USA has reported Q4 earnings per share at $5.21, which has decreased by 43.86% compared to Q3, which was 9.28. The company's most recent dividend yield sits at 0.56%, which has increased by 0.06% from 0.5% last quarter.

FGI Industries's earnings per share for Q3 sits at $0.11, whereas in Q2, they were at 0.1. Most recently, Ethan Allen Interiors reported earnings per share at $1.1, whereas in Q1 earnings per share sat at $1.11. Its most recent dividend yield is at 4.52%, which has increased by 0.04% from 4.48% in the previous quarter.

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.