Earnings season bites: 38 ASX stocks with P/Es of under 10

If the share price reactions are anything to go by, this earnings season has been one for the history books. We’ve seen individual companies rise by 20% and fall by 20%. And in both cases, the falls were savage despite a comprehensive beat on both the top and bottom lines. 

With about 75% of the ASX 200 reporting, the prevailing themes have been double digit cuts to profits and EPS, rising expenses, and companies having to eat into their cash stockpiles to cope with rising expenses. Companies which have cut or suspended their dividend were also met with brutal reactions from the market.

And yet, in spite of the volatile price changes, there are actually fewer companies with P/E ratios of under 10. Six less to be precise, since our last update (from 45 to 38). 

Some usual suspects, like commodities giants Pilbara Minerals (ASX: PLS) and South32 (ASX: S32) remain on the list. Others, like Woodside Energy (ASX: WDS), have dropped out of the list since the last update. 

With that said, let’s take a look at the refreshed low P/E stocks list.

The top three have changed

Last month, the top three were Genesis Minerals, Yancoal, and Whitehaven Coal.

Two of those companies have remained the same while Yancoal (ASX: YAL), which recently reported an 11% drop in revenues due to lower realised prices and revealed its cash balance has more than halved due to taxes and big dividend payouts. 

In its place is BSP Financial Group (ASX: BSP). The PNG-based company recently reported a 7% rise in net profits and an 11.6% rise in total assets. The dividend yield also rose to 15.2%, nearly four times as much as the yield on CBA shares. But it did note that return on equity is down by 10 basis points year-over-year.

BFL vs ASX 200 (as of Friday August 25 2023)

Retailers are becoming more expensive

Outside of the commodities companies which dominate the list, there are some firms whose P/Es recently moved closer to 10. The common link between these firms are all retailers which handed down strong earnings recently.

For instance, JB Hi-Fi (ASX: JBH) had seen a rally into its results day. When the report dropped on the ASX, the retailer had confirmed higher sales but a drop in profits and a flat-lining EPS figure. The total dividend payout was also cut marginally to $3.12 per share. The rally has seen JB Hi-Fi’s PE ratio move from 7.85 to 9.37 in just one month.

JBH vs ASX 200 (as of Friday 25 August 2023)

In the same industry, Nick Scali (ASX: NCK) reported a 15% rise in revenues and a 26% rise in profits. Margins increased by 250 basis points and the total dividend payout for the year increased by five cents to 75 cents per share. And with all those key metrics ticking analyst and investors’ boxes, the share price rallied. From last month’s PE ratio of 6.59, it’s now moved up to 9.86 - placing it on the doorstep of leaving our list (which cuts off at 10).

NCK vs ASX 200 (as of Friday 25 August 2023)