3 UK Stocks That Could Be Trading Below Their Estimated Value
Over the last 7 days, the United Kingdom market has risen 2.7%, and in the past year, it has climbed 8.8%, with earnings forecasted to grow by 13% annually. In this context, identifying stocks that may be trading below their estimated value can present significant opportunities for investors looking to capitalize on potential growth within a strengthening market.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
Name | Current Price | Fair Value (Est) | Discount (Est) |
Begbies Traynor Group (AIM:BEG) | £1.035 | £1.97 | 47.3% |
Energean (LSE:ENOG) | £9.99 | £18.79 | 46.8% |
WPP (LSE:WPP) | £7.506 | £14.28 | 47.4% |
LSL Property Services (LSE:LSL) | £3.42 | £6.35 | 46.2% |
Auction Technology Group (LSE:ATG) | £5.07 | £9.64 | 47.4% |
Velocity Composites (AIM:VEL) | £0.435 | £0.81 | 46.4% |
Elementis (LSE:ELM) | £1.598 | £3.07 | 48% |
Forterra (LSE:FORT) | £1.752 | £3.31 | 47.1% |
Accsys Technologies (AIM:AXS) | £0.549 | £1.04 | 47% |
M&C Saatchi (AIM:SAA) | £2.10 | £4.02 | 47.8% |
Let's review some notable picks from our screened stocks.
Moonpig Group
Overview: Moonpig Group PLC, with a market cap of £751.70 million, operates in the Netherlands and the United Kingdom offering online greeting cards and gifts through its subsidiaries.
Operations: Revenue segments (in millions of £): Greetz: 51.24, Moonpig: 241.33, Experiences: 48.58
Estimated Discount To Fair Value: 33.2%
Moonpig Group PLC's earnings grew by 28.4% over the past year, with revenue for the full year reaching £341.14 million and net income at £34.17 million. Despite a high level of debt, Moonpig is trading 33.2% below its estimated fair value of £3.26 per share (£2.18 currently). The company's revenue and earnings are forecast to grow faster than the UK market, with expected annual profit growth at 16.8%.
Ricardo
Overview: Ricardo plc offers environmental, technical, and strategic consultancy services across various regions including the United Kingdom, Europe, North America, China, the rest of Asia, Australia, and internationally with a market cap of £330.99 million.
Operations: The company's revenue segments include Rail (£75.90 million), Defense (£104.30 million), Performance Products (£84.70 million), Energy & Environment (£101.90 million), Automotive and Industrial - Emerging (£68.60 million), and Automotive and Industrial - Established (£24.20 million).
Estimated Discount To Fair Value: 41.2%
Ricardo plc is trading at £5.32, well below its estimated fair value of £9.05, indicating it is significantly undervalued based on cash flows. Analysts forecast revenue growth at 4.8% per year, outpacing the UK market's 3.5%. Expected to become profitable within three years with earnings projected to grow by 54.92% annually, Ricardo offers good relative value compared to peers despite a low forecasted return on equity of 14.3%.
Sage Group
Overview: The Sage Group plc, with a market cap of £10.85 billion, provides technology solutions and services for small and medium businesses in the United States, the United Kingdom, France, and internationally.
Operations: Revenue segments for Sage Group are as follows: Europe: £595 million, North America: £1.01 billion, and United Kingdom & Ireland: £488 million.
Estimated Discount To Fair Value: 33.8%
Sage Group is trading at £10.86, significantly below its estimated fair value of £16.41 based on discounted cash flows. Recent revenue growth, including a 9% increase in Q3 2024 to £585 million, underscores strong performance driven by the Sage Business Cloud portfolio. Despite high levels of debt, earnings are forecast to grow at 14.38% annually, outpacing the UK market's average and reflecting robust financial health and potential for future profitability amidst strategic partnerships and product enhancements.
Key Takeaways
Navigate through the entire inventory of 58 Undervalued UK Stocks Based On Cash Flows here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include LSE:MOON LSE:RCDO and LSE:SGE.
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