3 ASX shares with below-average P/E ratios

Growth shares are tumbling on inflation fears, cash is paying low returns. Here are 3 ASX shares trading on below-average earnings multiples.

| More on:
cheap shares represented by hand crossing out the 'un' in 'unaffordable' using red marker

Image source: Getty Images

Arguably, markets around the world are beginning to price in a higher-interest-rate environment. Unfortunately for ASX-listed growth shares, that makes high price-to-earnings (P/E) ratios a whole lot less attractive.

But many investors are still seeking alternative investments when cash is producing such dismal returns. In such times, value stocks tend to regain favourability. These are companies able to produce earnings that are also trading on reasonable multiples.

Below are 3 ASX shares that are profitable and are currently trading at below-industry-average P/E ratios.

How do these ASX shares compare to their peers?

Tribune Resources Ltd (ASX: TBR)

Tribune Resources is a small gold mining company with projects in East and West Kundana in Western Australia. It’s been a bumpy ride for shareholders over the years, and the last 12 months have been rather fruitless. Disappointingly, this ASX gold mining share has fallen by around 27% in the past year.

However, the company is profitable and generated $47.35 million in net profits after tax for the full year ending 31 December 2020. Based on Tribune’s current market capitalisation of $275 million, that puts it on a 6.1 P/E ratio.

It’s worth noting that earnings are highly dependent on the price of gold. Though, comparing Tribune’s earnings multiple to the industry average of 13.6, it appears to be trading at a discount.

Aurelia Metals Ltd (ASX: AMI)

Upping the size of the company, Aurelia Metals is a $493 million gold and base metals miner. Holding three operational gold mines across New South Wales, Aurelia has had a good run. The past year has seen the company’s share price surge by around 32%.

Despite the rally, Aurelia is still trading at a discount compared to the industry average. Delivering earnings per share (EPS) of 3.7 cents ending 31 December 2021, Aurelia is trading on an earnings multiple of 10.7.

Brickworks Limited (ASX: BKW)

Now we’re talking large caps. Brickworks is a $3.11 billion company specialising in property, investments, and building products. This company has certainly stood the test of time, dating back to 1930.

Holding a 39.4% interest in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks extends beyond a simplistic ASX-listed brickmaker share. The diversified business pulled in $71 million in statutory profits for 1HFY21.

Based on company filings, Brickworks delivered earnings per share of $2.15 for the period ending 31 January 2021. That puts the company on an earnings multiple of 9.4 times. This represents a significant discount to the materials industry average of 22.5 times.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Value Investing