Volkswagen, Renault and Air France-KLM are trading at less than five times their expected earnings. Three discounts that have nothing to do with one another. Along the way, you will run into a sausage, an R5 and your Flying Blue miles.
A P/E of 5 looks like a gift. The question is why the market refuses to pay more. At Volkswagen, Renault and Air France-KLM, the answer is never the same.
This list comes from our Screener, filtered for European stocks showing a 2026 P/E below 5, with a market cap of at least €3bn. For consistency, the P/Es for subsequent years are also very low, to avoid false positives.
Volkswagen
199 398 500 A. You probably did not read that number all the way through, nobody does. Just remember it appears in Volkswagen’s parts catalog, right alongside a Golf screw or a Passat mirror, and it refers to a sausage. The in-house currywurst has been coming out since 1973 from a butcher’s set up at the Wolfsburg plant. It is served in the site’s cafeterias, sold in supermarkets, and its ketchup carries the 199 398 500 B. In 2024, 8.552m units were sold across all variants, according to the works council, while the Volkswagen Group delivered 8.9m vehicles. Rest assured, the company still sells more cars than sausages.
That butcher’s says something about the place. Volkswagen stacks brands, from Skoda to Lamborghini via Ducati, and it also controls the trucker Traton. The clearest tell is what the listed pieces are worth. The group holds about 75% of Porsche AG’s equity, of which only 12.5% was floated in 2022. Valuing the unlisted shares at the same price as the shares that trade, that stake comes in near €30bn. Add Traton, 87.5% owned and valued at €14.4bn, and those two lines alone total €44bn, while the parent that owns them is worth €38.1bn on the stock market.
H1 2026 is more nuanced than it looks. Volkswagen delivered 4.1m vehicles, down 6.3%, with the entire decline coming from China, where its deliveries are collapsing by nearly 26% in a market that is itself down about 20%. The rest of the group is doing fairly well, with European deliveries up 3.5%, volume brands posting a 4.5% gain in operating profit, and Porsche Automotive moving from €0.8bn to €1.2bn. At the consolidated level, however, operating profit falls 11.6% and the margin slips from 4.2% to 3.8%.
In the market, the stock trades around €75 and goes for about 4.2x this year’s expected earnings, versus a 10-year average of 6.7x. The discount is not new, Volkswagen already traded at this level in 2022 and again in 2024 before briefly rebounding last year. The group now targets a 4.0% to 5.5% margin, while having lowered its revenue forecast. The next checkpoint is October 29, with 9-month results.
Renault
The Renault 5 rolled off the line from 1972 to 1984, then as the Supercinq through 1996. Your parents’ car, maybe your grandparents’, the first driver’s licenses and the summer trips down Route Nationale 7. Renault brought it back as an EV in Douai in October 2024, same pencil-stroke profile, same square headlights. Voted 2025 European Car of the Year with the Alpine A290 by the Car of the Year jury, it has become Europe’s best-selling B-segment EV.
I am not bringing it up for nostalgic purposes. Under the bodywork sits AmpR Small, the electric platform that carries the battery and motor. Renault is already building the new Micra on it for Nissan, and Ford signed in December to develop with Renault two EVs on an Ampere platform, produced in northern France, with the first expected in early 2028.
That changes how to read the first half. Group volumes slip slightly, yet revenue jumps 9.5%. Nearly two-thirds of the increase in automotive revenue comes from vehicles built for partners, up 54% LFL.
The market, meanwhile, focuses on what it earns. Beneath the group’s stated 5.2% margin, the auto business alone generates only 3%, down from 4% a year earlier, with nearly half of operating profit still coming from Mobilize, the bank that finances car purchases. In Europe, the group also loses 1.3% in sales while the market gains 5.7%. The stock is trading at around €28 and goes for about 4.6x expected earnings, versus a 10-year average of 7.8x, with a dividend yield near 8%. Renault nevertheless maintains its target of around a 5.5% margin for the year, which implies a markedly better H2.
Air France-KLM
You have probably flown Air France or KLM. So there’s a good chance you have a Flying Blue account, with a few thousand miles sitting there waiting for a free ticket. Some of those miles have already been sold by the group. Banks, hotels and retailers buy them to hand out to their own customers, and they pay at the time of order, often well before the ticket is ever booked.
Look at what that does to the numbers. In H1, Flying Blue delivered a 29% operating margin on revenue up 36%. Air France tops out at 2.5%, KLM at 1.0%. That small program, worth about one-thirtieth of revenue, generates nearly one-third of profit.
If you sit up front, you bankroll the rest. Business and La Première cabins saw revenue rise 11% over the half, Premium Comfort was up 13%, and that move upmarket lifted unit revenue. Enough to absorb about 85% of the fuel cost surge in the second quarter, after the price spike tied to the conflict in the Middle East, but not enough to lift the group’s margin, which barely holds at 2.9%.
That is why the stock trades at about 4.2x expected earnings. At €12, the market cap does not exceed €3,385m, while the group carried €8,376m of net debt as of June 30. Profit therefore applies to only a small fraction of the whole, which is enough to produce a headline-grabbing multiple. The right metric here is enterprise value to EBITDA, at 2.66x, while Delta trades at 7.69x and United at 7.11x, two traditional carriers. The question is whether a 2.9% margin is enough when you are still dragging €8.4bn of debt.
