value

One factor that is used in stock investing to indicate outperformance. A factor is a characteristic or set of characteristics common across a broad set of securities that both explains performance and provides a premium (or above-market return). Factors deliver above-market returns because investors demand an ex-ante premium for accepting the higher risks associated with such securities. The value factor is defined as low valuation ratios. Common ratios used include the price-earnings ratio, price-to-book ratio and price-to-sales ratio.