Stock Analysis

3 UK Stocks Estimated To Be Trading Below Their Intrinsic Value

LSE:SVS
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The UK stock market has faced challenges recently, with the FTSE 100 index closing lower due to weak trade data from China and falling commodity prices impacting major companies. Despite these hurdles, there are opportunities for investors to find stocks trading below their intrinsic value, which can be particularly appealing in a volatile market environment.

Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom

NameCurrent PriceFair Value (Est)Discount (Est)
Liontrust Asset Management (LSE:LIO)£6.38£12.3048.1%
Gaming Realms (AIM:GMR)£0.404£0.7747.6%
EnSilica (AIM:ENSI)£0.445£0.8245.8%
AstraZeneca (LSE:AZN)£126.10£244.2648.4%
Mercia Asset Management (AIM:MERC)£0.348£0.6848.5%
Restore (AIM:RST)£2.58£4.7445.5%
Ricardo (LSE:RCDO)£5.16£10.2349.6%
Franchise Brands (AIM:FRAN)£1.815£3.6149.8%
Tortilla Mexican Grill (AIM:MEX)£0.54£1.0146.4%
Nexxen International (AIM:NEXN)£2.74£5.3648.9%

Click here to see the full list of 53 stocks from our Undervalued UK Stocks Based On Cash Flows screener.

Underneath we present a selection of stocks filtered out by our screen.

Bridgepoint Group (LSE:BPT)

Overview: Bridgepoint Group plc is a private equity and private credit firm focusing on middle market, small mid cap, small cap, growth capital, buyouts investments, syndicate debt, direct lending and credit opportunities in private credit investments with a market cap of £2.24 billion.

Operations: The company's revenue segments include £3.60 million from Central, £74.50 million from Private Credit, and £285.60 million from Private Equity.

Estimated Discount To Fair Value: 23.8%

Bridgepoint Group appears undervalued based on cash flows, trading 23.8% below fair value estimates (£2.83 vs. £3.71). Despite lower profit margins (19.2%) compared to last year (40.7%), revenue and earnings are forecast to grow faster than the UK market at 18% and 33.3% per year respectively. Recent buybacks and dividend increases signal confidence, though current dividends are not well covered by earnings or free cash flows, raising sustainability concerns.

LSE:BPT Discounted Cash Flow as at Aug 2024
LSE:BPT Discounted Cash Flow as at Aug 2024

NCC Group (LSE:NCC)

Overview: NCC Group plc operates in the cyber and software resilience sector across the United Kingdom, Asia-Pacific, North America, and Europe with a market cap of £490.77 million.

Operations: The company's revenue segments include £258.50 million from Cyber Security and £65.90 million from Escode.

Estimated Discount To Fair Value: 42.8%

NCC Group is trading at 42.8% below its estimated fair value (£1.57 vs. £2.74). Despite a forecasted low return on equity (13.4%) and recent net losses (£24.9 million), the company is expected to become profitable within three years, with earnings projected to grow significantly each year (89.12%). However, revenue growth is modestly above the UK market average (4.7% vs 3.6%), and dividends are not well covered by earnings, raising sustainability concerns.

LSE:NCC Discounted Cash Flow as at Aug 2024
LSE:NCC Discounted Cash Flow as at Aug 2024

Savills (LSE:SVS)

Overview: Savills plc, with a market cap of £1.71 billion, provides real estate services across the United Kingdom, Continental Europe, the Asia Pacific, Africa, North America and the Middle East.

Operations: Savills generates revenue from four main segments: Consultancy (£459.80 million), Transaction Advisory (£772.90 million), Investment Management (£105.80 million), and Property and Facilities Management (£899.50 million).

Estimated Discount To Fair Value: 28.4%

Savills, trading at £12.62, is undervalued by approximately 28.4% relative to its estimated fair value of £17.63. Despite a decline in profit margins from 5.2% to 1.8%, the company's revenue is expected to grow faster than the UK market at 4.6% annually, with earnings projected to increase significantly by 30.74% per year over the next three years. Recent strategic partnerships and executive appointments are poised to bolster growth and operational efficiency across key regions like London and Florida.

LSE:SVS Discounted Cash Flow as at Aug 2024
LSE:SVS Discounted Cash Flow as at Aug 2024

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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.

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