In this article, we will take a look at the top 5 lowest P/E ratios of the S&P 500. You can skip this part and go to Top 25 Lowest P/E Ratios of the S&P 500.
5. APA Corporation (NASDAQ:APA)
P/E Ratio: 4.33
Number of hedge fund holders: 47
APA Corporation (NASDAQ:APA) is a Fortune 500 company. It is a holding company for Apache Corporation, an American company engaged in hydrocarbon exploration.
A total of 47 hedge funds tracked by Insider Monkey reported having stakes in APA Corporation (NASDAQ:APA) as of the end of the third quarter, compared to 36 funds in the previous quarter. This shows a significant rise in hedge fund sentiment around APA Corporation (NASDAQ:APA).
4. Principal Financial Group, Inc. (NASDAQ:PFG)
P/E Ratio: 4.33
Number of hedge fund holders: 17
Principal Financial Group is another finance and insurance play in our list of the 25 stocks with lowest PE ratios in the S&P 500 index. Last month, Principal Financial Group (NASDAQ:PFG) fell after Credit Suisse analyst Andrew Kilgerman downgraded Principal Financial Group, Inc. (NASDAQ:PFG) to Underperform from Neutral. The analyst cited valuation as the reason for the rating cut.
However, the analyst likes Principal Financial Group, Inc. (NASDAQ:PFG), and praised Principal Financial Group, Inc. (NASDAQ:PFG)’s “de-risking of fixed annuities and universal life with secondary guarantees and focusing on capital return.”
3. NRG Energy, Inc. (NYSE:NRG)
P/E Ratio: 4.05
Number of hedge fund holders: 27
NRG Energy, Inc. (NYSE:NRG) is one of the most notable energy companies in the S&P 500 index. Recently, BofA upgraded NRG Energy, Inc. (NYSE:NRG) to Neutral from Underperform. BofA analysts said that NRG Energy, Inc. (NYSE:NRG)’s valuation has improved after it fell following its announcement to buy Vivint Smart Home (NYSE:VVNT) for $5.2 billion .
As of the end of the third quarter, 27 hedge funds tracked by Insider Monkey reported having stakes in NRG Energy, Inc. (NYSE:NRG). The total value of these stakes was about $1.2 billion.
2. American International Group, Inc. (NYSE:AIG)
P/E Ratio: 3.82
Number of hedge fund holders: 48
American International is one of the biggest insurance and financial companies. In December, American International Group, Inc. (NYSE:AIG)’s AIG Financial Products Corp. (FP) filed for Chapter 11 bankruptcy. The filing was part of the process started after the 2008 financial crisis. Recently, Citi analyst Michael Ward said that he likes AIG stock ahead of the fourth quarter report, in addition to several other finance and insurance plays.
1. Lumen Technologies, Inc. (NYSE:LUMN)
P/E Ratio: 2.95
Number of hedge fund holders: 34
Lumen Technologies, Inc. (NYSE:LUMN) is a Louisiana-based company operating in the telecom industry. It is one of the top 25 stocks with lowest PE ratios in the S&P 500 index. In November, Lumen Technologies, Inc. (NYSE:LUMN) fell after the company posted weak Q3 results and terminated its dividend. Lumen Technologies, Inc. (NYSE:LUMN) said it plans to move towards share buybacks.
As of the end of the third quarter, 34 hedge funds tracked by Insider Monkey had stakes in Lumen Technologies, Inc. (NYSE:LUMN).
Here is what Longleaf Partners specifically said about Lumen Technologies, Inc. (NYSE:LUMN) in its Q3 2022 investor letter:
“Lumen Technologies, Inc. (NYSE:LUMN) – Global fiber company Lumen was the top detractor in the quarter. In September, the company announced a new CEO, Kate Johnson, would take over for Jeff Storey. Johnson has a strong track record of delivering organic revenue growth, the primary area where Lumen has struggled. Johnson held previous roles at GE and Microsoft, where she most recently served as head of Microsoft US and doubled her division’s revenue in only four years. Multiple checks through our network vouch for her and suggest this leadership change is a positive upgrade that will bring the discipline and focus on sales that Lumen has been missing. The market reacted negatively with concern over the potential for another dividend cut or strategy change. We are confident the stock price reaction is highly overblown versus any impact that a potential dividend cut would have on value per share. The stock now trades at 4.5x EBITDA, and we believe the best value accretive capital allocation move today is share repurchase. Shortly after quarter end, Lumen closed on the sale of part of its consumer business to Apollo, further improving its balance sheet and business mix.”
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