What Is Value Stock? Meaning & Example
Definition
A value stock trades at a low price relative to measures like earnings, book value or cash flow. Investors buy them hoping the market will eventually recognize their worth.
Related terms
A growth stock belongs to a company expected to increase revenue and earnings faster than average. Investors often pay higher valuations for that potential.
P/E RatioThe price-to-earnings ratio divides a company's share price by its earnings per share. It shows how much investors pay for each dollar of profit.
Dividend YieldDividend yield is the annual dividend per share divided by the share price, expressed as a percentage. It shows the income return from dividends alone.
What is Value Stock?
A value stock trades at a low price relative to measures like earnings, book value or cash flow. Investors buy them hoping the market will eventually recognize their worth.
Can you give an example of Value Stock?
A steady company trading at a P/E of 9 when its industry averages 16 may be considered a value stock.