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.

Benzinga Insights has compiled a list of value stocks in the basic materials sector that may be worth watching:

1. Vale VALE - P/E: 5.93
2. Olin OLN - P/E: 8.41
3. Crown ElectroKinetics CRKN - P/E: 0.0
4. United States Steel X - P/E: 5.73
5. SunCoke Energy SXC - P/E: 9.06

This quarter, Vale experienced a decrease in earnings per share, which was $0.41 in Q1 and is now $0.2. Olin's earnings per share for Q2 sits at $1.13, whereas in Q1, they were at 1.16. Most recently, the company reported a dividend yield of 1.44%, which has decreased by 0.07% from last quarter's yield of 1.51%.

Crown ElectroKinetics's earnings per share for Q2 sits at $-18.02, whereas in Q1, they were at -4.8. United States Steel saw an increase in earnings per share from 0.77 in Q1 to $1.92 now. Its most recent dividend yield is at 0.78%, which has decreased by 0.07% from 0.85% in the previous quarter.

SunCoke Energy's earnings per share for Q2 sits at $0.24, whereas in Q1, they were at 0.19. The company's most recent dividend yield sits at 4.5%, which has increased by 0.22% from 4.28% last 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.