The United Kingdom's FTSE 100 index recently experienced a downturn, closing 0.4 percent lower amid disappointing trade data from China, which has struggled to rebound from the pandemic. This market environment highlights the importance of identifying undervalued stocks that may offer potential growth despite broader economic challenges. In this article, we will explore three such undervalued stocks on the UK exchange, including Franchise Brands and two others that stand out in these uncertain times.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| TBC Bank Group (LSE:TBCG) | £30.40 | £59.19 | 48.6% |
| Tracsis (AIM:TRCS) | £5.80 | £11.40 | 49.1% |
| Liontrust Asset Management (LSE:LIO) | £6.35 | £12.29 | 48.3% |
| C&C Group (LSE:CCR) | £1.534 | £2.99 | 48.8% |
| AstraZeneca (LSE:AZN) | £130.46 | £253.21 | 48.5% |
| Mercia Asset Management (AIM:MERC) | £0.35 | £0.68 | 48.2% |
| Ricardo (LSE:RCDO) | £5.16 | £10.24 | 49.6% |
| Franchise Brands (AIM:FRAN) | £1.855 | £3.62 | 48.8% |
| Tortilla Mexican Grill (AIM:MEX) | £0.52 | £1.01 | 48.4% |
| SysGroup (AIM:SYS) | £0.335 | £0.66 | 49.1% |
Underneath we present a selection of stocks filtered out by our screen.
Franchise Brands (AIM:FRAN)
Overview: Franchise Brands plc, with a market cap of £356.57 million, operates in franchising and related activities across the United Kingdom, North America, and Europe through its subsidiaries.
Operations: The company's revenue segments include Azura (£0.75 million), Pirtek (£41.95 million), B2C Division (£6.11 million), Water & Waste (£48.88 million), and Filta International (£27.12 million).
Estimated Discount To Fair Value: 48.8%
Franchise Brands plc is trading at £1.86, significantly below its estimated fair value of £3.62, making it highly undervalued based on discounted cash flow analysis. Despite recent management changes and a dip in net income to £3.04 million from £8.13 million last year, the company is forecasted to experience robust annual earnings growth of 40.65% and revenue growth of 11.5%, outpacing the broader UK market's expected growth rates.
- According our earnings growth report, there's an indication that Franchise Brands might be ready to expand.
- Navigate through the intricacies of Franchise Brands with our comprehensive financial health report here.
Victorian Plumbing Group (AIM:VIC)
Overview: Victorian Plumbing Group plc operates as an online retailer of bathroom products and accessories in the United Kingdom, with a market cap of £310.72 million.
Operations: The company's revenue segment consists of £282.90 million from online retailing of bathroom products and accessories in the United Kingdom.
Estimated Discount To Fair Value: 27.1%
Victorian Plumbing Group is trading at £0.95, significantly below its estimated fair value of £1.31, indicating it is undervalued based on discounted cash flow analysis. Despite a slight dip in sales to £144.6 million for H1 2024, net income increased to £4.5 million from the previous year's £4.2 million. The company’s earnings are forecasted to grow at 33.9% annually over the next three years, outpacing both its revenue growth and the broader UK market's earnings growth rate of 14.3%.
- Our comprehensive growth report raises the possibility that Victorian Plumbing Group is poised for substantial financial growth.
- Unlock comprehensive insights into our analysis of Victorian Plumbing Group stock in this financial health report.
Stelrad Group (LSE:SRAD)
Overview: Stelrad Group PLC manufactures and distributes radiators across the United Kingdom, Ireland, Europe, Turkey, and internationally, with a market cap of £194.21 million.
Operations: The company generates £294.27 million from the manufacture and distribution of radiators across its various markets.
Estimated Discount To Fair Value: 41.9%
Stelrad Group's recent earnings call revealed a slight decline in sales to £143.12 million for H1 2024, but net income increased marginally to £8.02 million. The stock is trading at £1.53, significantly below its estimated fair value of £2.63, indicating substantial undervaluation based on discounted cash flow analysis. Despite high debt levels and an unstable dividend track record, the company's earnings are forecasted to grow faster than the broader UK market at 14.5% annually over the next three years.
- In light of our recent growth report, it seems possible that Stelrad Group's financial performance will exceed current levels.
- Take a closer look at Stelrad Group's balance sheet health here in our report.
Summing It All Up
- Unlock more gems! Our Undervalued UK Stocks Based On Cash Flows screener has unearthed 54 more companies for you to explore.Click here to unveil our expertly curated list of 57 Undervalued UK Stocks Based On Cash Flows.
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Seeking Other Investments?
- Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
- Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.
- Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.
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.
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