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Highlights
- The price-to-earnings ratio (P/E) is an important tool to estimate the worth of a stock, whether it is undervalued or overvalued.
- A high P/E may indicate that a stock's price is excessively high in relation to its earnings, whereas a low P/E ratio may suggest that the stock price is currently undervalued in relation to earnings.
- P/E also tells about a stock's assessment compared to its industry group or a benchmark.
One of the most popular indicators to estimate the value of stocks is the price-to-earnings ratio (P/E). It is calculated by dividing the share price of a company by its earnings per share.
Earnings per share (EPS), a measure of a company's financial health, is the portion of its profit assigned to each outstanding share of its common stock.
In this article, we at Kalkine Media® will discuss some large-cap stocks from ASX with lower P/E ratio.
Fortescue Metals Group Ltd (ASX:FMG)
FMG is a world leading company specialising in iron ore. The ASX-listed firm operates infrastructure and supply chain projects.
In FY22, the company registered track record shipments of 189 million tonnes, surpassing the higher range of outlook. Its underlying Earnings before interest, taxes, depreciation, and amortization (EBITDA) was US$10.6 billion. Similarly, FMG reported a net profit after tax (NPAT) of US$6.2 billion. Its earnings per share was US$2.01.
Rio Tinto Ltd (ASX:RIO)
Rio Tinto is an ASX listed prominent large cap company. It specialises in activities related to mineral resources. Recently, the company entered an agreement with Turquoise Hill. Under the agreement, RIO will acquire full ownership of Turquoise Hill worth C$43/ share.
For the half year ended 30 June 2022, the company's underlying EBITDA was AU$16 billion and 34% underlying ROCE. However, the company delivered a downfall against H12021 with a 10% reduction in consolidated sales revenue and a 26% reduction in underlying EBITDA. Similarly, its net earnings declined by 28%, and the total dividend declined by 53%.
BHP Group Ltd (ASX:BHP)
BHP Group specialises in producing commodities such as copper, iron ore, potash, nickel, and metallurgical coal. The ASX listed resources company reported record underlying earnings per share of 470.6 USc in FY22. Its profit from operations during the period was US$34.1 billion, and its total economic contribution was US$78.1 billion.
During the financial year, BHP merged its petroleum business with Woodside. Further, its investment of US$5.7 billion in Jansen Potash Project in Canada received approval, commemorating its entry into a new commodity.
Woodside Energy Group Ltd (ASX:WDS)
Woodside is an ASX-listed global energy company. Following are the major highlights of Woodside Energy for H122.
- NPAT of US$1,640 million
- Underlying NPAT of US$1,819 million
- Positive free cash flow of US$2,568 million
- Liquidity of US$7,915 million
- Announced an interim dividend of 109 US cents per share
The company also started trading on London Stock Exchange and New York Stock Exchange during the reporting period.
Sonic Healthcare Ltd (ASX:SHL)
Sonic Healthcare offers healthcare services through its laboratory, radiology, and other segments.
Financial review of Sonic for FY22
- Revenue of AU$9.3 billion, up by 7%
- EBITDA of AU$2.8 billion, up by 11%
- Net profit of AU$1.5 billion, up by 11%
The company invested AU$628 million in acquisitions during the year, following further opportunities. Its full-year dividend for the period was AU$1.00, up by 10%.
Newcrest Mining Ltd (ASX:NCM)
Newcrest Mining is a mining company specialising in gold and gold/copper concentrate. Let us look at the operating and financial performance of Newcrest for FY22.
- AU$872 million in statutory and underlying profit
- AU$1,680 million in cash flow from operating activities
- Fully franked final dividend of US 20 cents per share
- Acquired Brucejack mine in British Columbia, Canada
Macquarie Group Ltd (ASX:MQG)
Macquarie Group is an ASX-listed global financial services company. Below are the major highlights of Macquarie Group for FY22.
- 36% growth in operating income compared to FY21
- 56% growth in profit
- 51% growth in EPS
- 31% surge in annualised growth in equity
- A 40% franked ordinary dividend of AU$6.22 compared to AU$4.70 of previous year. Dividends represented a 50% payout ratio.
Scentre Group (ASX:SCG)
Scentre Group, operating in Australia and New Zealand, owns and operates living centres. In the half year ended 30 June 2022, the company's operating profit surged by 17.5% to AU$540.5 million. Similarly, its Funds from Operations (FFO) increased by 18.3% to AU$548.6 million.
According to the company, it has increased its portfolio occupancy to 98.8%, up 30bps since 30 June 2021. The company's lease deals demonstrated significant improvement during the first six months.
James Hardie Industries PLC (ASX:JHX)
James Hardie Industries is an ASX-listed firm that offers fibre cement building solutions.
Performance of James Hardie for the quarter ended 30 June 2022
- 19% increment in net sales from ordinary activities
- 34% rise in net profit
Outlook - Based on the continued, strong implementation of the worldwide strategy and considering continued inflationary pressures and housing market uncertainty, the company’s management reduced the Net Income guidance range for FY23.
