Energy

These 4 Value Stocks Are Showing Earnings And Paying Dividends


A key measure for valuing stocks is the price/earnings ratio — how much in the way of earnings am I buying relative to the price I am paying?

Hot stocks with exciting front page stories but no or very little earnings might have high p/e’s. Those stocks without excitement or a wide daily media following but which continue to make money and pay dividends tend to have much lower p/e’s — these are value stocks.

A price/earnings ratio is not everything, of course, but it’s one of the best, decent single measures to start with.

Why would such companies be priced so cheaply? It could be a number of reasons — often they’re thought to be in a sector that’s gone out of favor because of a sense among analysts that their future earning potential has diminished. Or it might be concerns about specific unforeseen issues that the company is experiencing.

Whatever the case, here are 4 stocks with low p/e’s that might fit the value stock criteria — all of these have multiples of less than 10 at a time when the stock market as a whole sells for a p/e of over 20.

Footlocker is New York Stock Exchange-traded, based in New York and recently reported less of an earnings gain than had been expected. Investors don’t like that and the stock dropped from 65 in April to its current price of 41.

Footlocker weekly price chart.

stockcharts.com

The earnings record for the footwear maker will still be green for the year and the 5-year track record of earnings is good.  Footlocker has more shareholder equity than long-term debt and the current ratio is positive. The company pays a 3.6% dividend. The price/earnings ratio is 9.

HollyFrontier is in the oil and gas refining business and has dropped from 70 in October, 2018 to 44. The 5-year earnings record is negative but the company this year is showing excellent earnings growth.

HollyFrontier weekly price chart.

stockcharts.com

It’s selling at just over book value with a price/earnings ratio of a mere 7. HollyFrontier’s long-term debt is less than shareholder equity and the current ratio is green. The company is paying a dividend that comes to 3%.

Sony is going for a price/earnings ratio of 7.9. The maker of electronic equipment, headquartered in Japan, is out-of-favor despite a good earnings record over the past 5 years and a good last year.

Sony weekly price chart.

stockcharts.com

Some analysts apparently do not think that the company can keep that up — the stock sold off from 60 late last year to an April low of 42. In May, the company announced a stock buy-back program and has since recovered back up to 52. Shareholder equity exceeds long-term debt. Sony’s dividend is .70%.

Kohl’s reported fewer 1st quarter earnings than expected and the stock has dropped from a late April peak of 75 to today’s price of 46. The department store chain now trades at a price/earnings ratio of 9.6.

Kohl’s weekly price chart.

stockcharts.com

Earnings are positive for this year and it’s the same look on the 5-year time frame as well. Here’s a concern: long-term debt exceeds shareholder equity. Meantime, Kohl’s continues to pay a significant dividend of 5.8%.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.

 



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