# Value Stock

*Saving & Investing — Finicade finance glossary*

A value stock trades at a low price relative to fundamentals — earnings, book value, cash flow — often in mature or unloved industries. The academic value premium holds that this group has outperformed over very long periods as compensation for bearing distress risk. The individual-stock danger is the value trap: statistical cheapness that reflects a business genuinely in decline, where earnings fall faster than the price.

**Also known as:** value shares, cheap stocks

**Related terms:** [Growth Stock](https://finicade.com/glossary/growth-stock), [Value Investing](https://finicade.com/glossary/value-investing), [P/E Ratio](https://finicade.com/glossary/p-e-ratio), [Book Value](https://finicade.com/glossary/book-value), [Dividend Yield](https://finicade.com/glossary/dividend-yield)

Source: https://finicade.com/glossary/value-stock