--%>

What is the current example of a value company

What is the current example of a value company and would you buy it as an investment. Why or why not?

E

Expert

Verified

An illustration of a value company would be Altria/Phillip Morris. Its its dividend is high, it is in saturation phase and not expected to grow much in future. Management there does not add a whole lot of value, and earnings do not have a lot of expected progress.

I would invest in its stock because historically the value stock have been seen to outperform the growth stocks. The claim that value stocks produce higher returns than growth stocks over time has been borne out by many studies. These studies objectively identify value stocks in slightly different ways, all of which are valid. Some studies advocate stocks with low P/E (price to earnings) ratios. The Other studies advocate buying stocks with high ratios of book value to the market value. Still others advocate purchasing stocks with high dividend rates. These are all different methods of identifying value stocks. All produce similar results when applied consistently over long periods of time.

   Related Questions in Corporate Finance

  • Q : Calculated Free Cash Flow I think Free

    I think Free Cash Flow (FCF) can be acquired from the Equity Cash Flow (CFac) using the relation as: FCF = CFac + Interests – ΔD. Is it true?

  • Q : Define Economy Impacts Economy Impacts

    Economy Impacts: An upcoming economy is indicated by rise in stock market, as stock market is primary indicator of a economic strength of a country. Progressing economy results in market boom. Yield of companies’ increases on improving economy,

  • Q : Additive risk in the CAPM Suppose that

    Suppose that the two securities APPL and MSFT account for the entire large cap technology component of the S&P 500 (hypothetically – of course – there are really plenty of others). Further, suppose that their weights in the S&P index were as follow

  • Q : How could we acquire an indisputable

    How could we acquire an indisputable discount rate?

  • Q : Evaluating Beta of a Corporation

    Baldwin Corporation is planning to expand into the business of providing on-demand movies. Baldwin has debt-to-equity ratio of .25, its pretax cost of debt is 9%, and its marginal tax rate is 40%. The Harrington Corporation is already in the on-demand movie business,

  • Q : Explain the way of estimating an average

    Explain the way of estimating an average.

  • Q : Calculating Beta when market

    A company with a market capitalization of $100 million has no debt and a beta of 0.8. What will its beta be after it borrows $50 million (giving that there are no other changes and no taxes)?

  • Q : How must we compute the beta and the

    How must we compute the beta and the risk premium?

  • Q : Explain breakthroughs on

    Explain breakthroughs on low-discrepancy sequences.

  • Q : Define Strong form market efficiency

    Strong form market efficiency: Strong form market efficiency defines that the price of a security in the market replicates all information—public and also private or within information. Strong form efficiency