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Franchise Brands And 2 More UK Stocks That May Be Trading Below Estimated Value
editorial-team@simplywallst.com (Simply Wall St)
4 min read
As the United Kingdom's FTSE 100 index experiences fluctuations influenced by weak trade data from China, investors are closely monitoring the market for opportunities amid global uncertainties. In such a volatile environment, identifying stocks that may be undervalued could present potential advantages, as these equities might offer intrinsic value not fully reflected in their current market prices.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
Overview: Franchise Brands plc operates in franchising and related activities across the United Kingdom, North America, and Europe, with a market cap of £307.52 million.
Operations: The company's revenue is derived from several segments, including Azura (£0.81 million), Pirtek (£60.78 million), B2C Division (£5.95 million), Filta International (£25.64 million), and Water & Waste Services (£49.17 million).
Estimated Discount To Fair Value: 40%
Franchise Brands appears undervalued based on cash flows, trading 40% below its estimated fair value of £2.66 per share. The company has demonstrated strong financial growth, with earnings forecast to grow significantly at 44.2% annually, outpacing the UK market average. Recent strategic leadership changes aim to harness this growth potential following rapid expansion through acquisitions like Filta and Pirtek, contributing to annualised system sales of approximately £400 million across multiple regions.
Overview: Restore plc, along with its subsidiaries, offers services to offices and workplaces in both the public and private sectors mainly in the United Kingdom, with a market capitalization of £342.31 million.
Operations: The company's revenue is derived from two main segments: Secure Lifecycle Services, contributing £104.40 million, and Digital & Information Management, generating £172.50 million.
Estimated Discount To Fair Value: 31.6%
Restore plc is trading 31.6% below its estimated fair value of £3.66 per share, reflecting potential undervaluation based on cash flows. The company has returned to profitability, reporting a net income of £6.4 million for the first half of 2024 compared to a loss last year. Earnings growth is forecast at a significant 48.7% annually, surpassing UK market averages, although interest payments are not well covered by earnings and revenue growth remains modest at 4.4%.
Overview: Informa plc is an international company that provides events, digital services, and academic research across the UK, Continental Europe, the US, China, and other regions with a market cap of £10.96 billion.
Operations: The company's revenue segments include Informa Tech (£426.70 million), Informa Connect (£630.20 million), Informa Markets (£1.67 billion), and Taylor & Francis (£636.70 million).
Estimated Discount To Fair Value: 46.1%
Informa is trading 46.1% below its estimated fair value of £15.39 per share, highlighting potential undervaluation based on cash flows. Despite a history of unstable dividends, the company shows promise with forecasted earnings growth at 22.5% annually, outpacing UK market averages. Revenue is expected to grow at 7.6% per year, though its Return on Equity remains modestly low in future projections. Recent strategic expansions include extending partnerships and acquisitions in luxury markets and digital businesses.
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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 AIM:FRAN AIM:RST and LSE:INF.
