Three UK Stocks Estimated To Be Trading Below Fair Value By Up To 19%

The UK market has recently faced challenges, with the FTSE 100 index experiencing declines due to weak trade data from China, highlighting concerns over global economic recovery. In this environment, identifying stocks that are trading below their fair value can offer potential opportunities for investors seeking resilience amid broader market uncertainties.

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

Name	Current Price	Fair Value (Est)	Discount (Est)
Gaming Realms (AIM:GMR)	£0.369	£0.73	49.3%
Fevertree Drinks (AIM:FEVR)	£6.97	£12.73	45.2%
GlobalData (AIM:DATA)	£2.02	£3.71	45.6%
On the Beach Group (LSE:OTB)	£1.676	£3.00	44.1%
Informa (LSE:INF)	£8.566	£15.40	44.4%
Nexxen International (AIM:NEXN)	£3.87	£7.55	48.7%
St. James's Place (LSE:STJ)	£9.02	£16.42	45.1%
Videndum (LSE:VID)	£2.58	£4.64	44.4%
Calnex Solutions (AIM:CLX)	£0.61	£1.05	42.2%
Genel Energy (LSE:GENL)	£0.85	£1.55	45.2%

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

Let's dive into some prime choices out of the screener.

Dr. Martens (LSE:DOCS)

Overview: Dr. Martens plc designs, develops, procures, markets, sells, and distributes footwear under the Dr. Martens brand with a market cap of £664.53 million.

Operations: The company generates revenue primarily from its footwear segment, amounting to £805.90 million.

Estimated Discount To Fair Value: 11.4%

Dr. Martens is trading at 11.4% below its estimated fair value, indicating potential undervaluation based on cash flows. Despite a challenging first half of 2024 with a net loss of £20.8 million, earnings are forecast to grow significantly at 40.5% annually, outpacing the UK market average. However, profit margins have decreased from last year and interest payments are not well covered by earnings, suggesting financial challenges amid leadership changes set for January 2025.

• Our expertly prepared growth report on Dr. Martens implies its future financial outlook may be stronger than recent results.
• Dive into the specifics of Dr. Martens here with our thorough financial health report.

Fresnillo (LSE:FRES)

Overview: Fresnillo plc is a company that mines, develops, and produces non-ferrous minerals in Mexico with a market cap of approximately £4.76 billion.

Operations: The company's revenue segments include Cienega with $195.82 million, Saucito at $607.29 million, Fresnillo generating $439.76 million, Herradura contributing $633.78 million, Juanicipio at $546.80 million, SAN Julian with $404.32 million, and Noche Buena providing $56.24 million in revenue.

Estimated Discount To Fair Value: 12.4%

Fresnillo is trading at £6.46, below its estimated fair value of £7.37, highlighting potential undervaluation based on cash flows. Recent production increases in gold and silver support this view, although earnings growth is expected to significantly outpace revenue growth over the next three years. Despite a low forecasted return on equity of 9.5%, Fresnillo's earnings are projected to grow at 33% annually, surpassing UK market averages and reflecting robust future profitability prospects.

• The growth report we've compiled suggests that Fresnillo's future prospects could be on the up.
• Get an in-depth perspective on Fresnillo's balance sheet by reading our health report here.

Savills (LSE:SVS)

Overview: Savills plc, along with its subsidiaries, provides real estate services across the United Kingdom, Continental Europe, the Asia Pacific, Africa, North America and the Middle East with a market cap of £1.45 billion.

Operations: The company's revenue segments include Consultancy (£464.80 million), Transaction Advisory (£803.60 million), Investment Management (£100.50 million), and Property and Facilities Management (£920.90 million).

Estimated Discount To Fair Value: 19%

Savills is trading at £10.74, under its estimated fair value of £13.26, indicating potential undervaluation based on cash flows. While revenue growth is modest at 5% annually, earnings are projected to grow significantly at 33.3% per year, outpacing the UK market average. However, profit margins have declined from last year and the company has an unstable dividend track record. Recent strategic moves include marketing a prime Dublin office and expanding in the Middle East commercial sector.

• Our comprehensive growth report raises the possibility that Savills is poised for substantial financial growth.
• Click to explore a detailed breakdown of our findings in Savills' balance sheet health report.

Next Steps

• Unlock more gems! Our Undervalued UK Stocks Based On Cash Flows screener has unearthed 50 more companies for you to explore.Click here to unveil our expertly curated list of 53 Undervalued UK Stocks Based On Cash Flows.
• Are these companies part of your investment strategy? Use Simply Wall St to consolidate your holdings into a portfolio and gain insights with our comprehensive analysis tools.
• Simply Wall St is a revolutionary app designed for long-term stock investors, it's free and covers every market in the world.

Curious About Other Options?

• 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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