Just a few months ago, you had to make an effort to find a cheaply valued stock. Thanks to the sharp price losses of recent months, this is now quite easy.
Now one can argue about what is a favorable valuation at all. From my point of view, a good indicator is the relationship between the current share price and the last annual earnings per share. share, the so-called price-earnings ratio (P / E).
Falling stock prices with rising profits?
As the fall in prices affects companies of all sizes and across almost all sectors, there are also some shares with very low P / E ratios in DAX, where the largest German groups are listed. Here are two examples.
Let’s start with that BASF-Action (WKN: BASF11). The BASF share has long been one of the shares with a relatively low price-to-earnings ratio in DAX. But in the last few months, the P / E ratio has fallen significantly further. Since the beginning of the year alone, the price of the BASF share has fallen by almost a third to just 43 euros (as of 19 July 2022, relevant for all prices).
At the same time, however, BASF pulled excellent numbers out of the hat in the most recent financial year and also in the first quarters of the year. In the most recent financial year, earnings per share 6.00 EUR. This sets the P / E ratio at a very low 7.
If BASF paid out all its profits to its shareholders, after just seven years, it would have all its investment back and still own the same share in the company. Of course, this only applies if BASF can keep the earnings per. stock constantly.
BASF does not pay out all the profits, but at least a large part of it. This year, a dividend of EUR 3.40 per share was distributed. shares. It gives a yield of as much as 7.9%. The company also plans to raise dividends each year.
At least on the basis of these two key figures, the share is therefore extremely cheap.
An even lower price-earnings ratio can currently be found at bmw-Del (WKN: 519000) find. The BMW stock has also suffered a lot since the beginning of the year. But with EUR 79.29 at the moment, this share is only about 12% smaller than at the beginning of the year.
BMW could also look forward to excellent business in the past year. The extensive supply difficulties for several components have meant that the major car manufacturers have been able to sell their products at high prices. Therefore, profits have risen sharply. At BMW, a total of 18.79 euros net profit per share stuck solid last year.
So at the moment you can buy the stock for a little more than 4 times last year’s earnings! The yield is also impressive. A total of 5.80 euros were awarded this year. This means that you also get an impressive return of 7.3% here.
This stock is also extremely attractive based on these two indicators. Thanks to the high dividend, you can also relatively easily build an additional income with these two shares.
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Dennis Zeipert owns none of the aforementioned shares. The Motley Fool recommends BMW.