UK Stocks That Might Be Trading Below Their Estimated Value

The United Kingdom's stock market has recently experienced some turbulence, with the FTSE 100 and FTSE 250 indices closing lower amid weak trade data from China, highlighting concerns about global economic recovery. In such conditions, identifying stocks that might be trading below their estimated value becomes crucial for investors seeking opportunities amidst broader market challenges.

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

Name	Current Price	Fair Value (Est)	Discount (Est)
Foresight Group Holdings (LSE:FSG)	£3.41	£6.21	45.1%
Gooch & Housego (AIM:GHH)	£3.91	£7.22	45.8%
Aptitude Software Group (LSE:APTD)	£2.68	£5.22	48.6%
NIOX Group (AIM:NIOX)	£0.602	£1.09	44.7%
On the Beach Group (LSE:OTB)	£2.655	£4.83	45%
Applied Nutrition (LSE:APN)	£1.082	£1.97	45%
Franchise Brands (AIM:FRAN)	£1.305	£2.45	46.7%
Kromek Group (AIM:KMK)	£0.0525	£0.10	48.2%
Ibstock (LSE:IBST)	£1.772	£3.27	45.9%
CVS Group (AIM:CVSG)	£10.22	£18.50	44.8%

Click here to see the full list of 54 stocks from our Undervalued UK Stocks Based On Cash Flows screener.

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

Brickability Group (AIM:BRCK)

Overview: Brickability Group Plc, with a market cap of £190.41 million, supplies, distributes, and imports building products in the United Kingdom through its subsidiaries.

Operations: The company's revenue is primarily derived from Bricks and Building Materials (£380.56 million), followed by Importing (£90.55 million), Contracting (£88.22 million), and Distribution (£63.21 million).

Estimated Discount To Fair Value: 21.8%

Brickability Group, trading at £0.59, appears undervalued based on discounted cash flow analysis with a fair value estimate of £0.76, offering a potential upside of over 20%. While earnings are expected to grow significantly at 39.6% annually over the next three years—outpacing the UK market—the dividend yield of 5.66% is not well covered by earnings. Despite revenue growth forecasts exceeding the market average, profit margins have declined from last year’s figures.

• The growth report we've compiled suggests that Brickability Group's future prospects could be on the up.
• Click here to discover the nuances of Brickability Group with our detailed financial health report.

Restore (AIM:RST)

Overview: Restore plc, with a market cap of £293.02 million, offers services to offices and workplaces in both the public and private sectors primarily across the United Kingdom.

Operations: The company's revenue segments include Datashred (£36 million), Technology (£36.10 million), Harrow Green (£35.30 million), and Information Management (£167.90 million).

Estimated Discount To Fair Value: 43%

Restore, trading at £2.14, is significantly undervalued with a fair value estimate of £3.76, offering potential upside exceeding 20%. Earnings are projected to grow annually by 22.7%, outpacing the UK market's forecast of 13.9%. Despite an unstable dividend track record, recent results show net income of £12.4 million compared to a loss last year. The company is exploring bolt-on acquisitions to enhance margins and growth opportunities further.

• Our comprehensive growth report raises the possibility that Restore is poised for substantial financial growth.
• Click here and access our complete balance sheet health report to understand the dynamics of Restore.

Babcock International Group (LSE:BAB)

Overview: Babcock International Group PLC is involved in the design, development, manufacture, and integration of specialist systems for aerospace, defense, and security across various regions including the UK and internationally, with a market cap of £3.69 billion.

Operations: The company's revenue segments consist of Land (£1.14 billion), Marine (£1.47 billion), Nuclear (£1.68 billion), and Aviation (£333.10 million).

Estimated Discount To Fair Value: 36.3%

Babcock International Group, trading at £7.34, is significantly undervalued with a fair value estimate of £11.52, presenting potential upside over 20%. The company recently secured a five-year £1 billion contract extension with the UK Ministry of Defence, reinforcing its strategic position. Revenue guidance for fiscal year 2025 has been upgraded to £4.9 billion due to robust growth in Nuclear and Marine sectors. Earnings are forecasted to grow annually by 14.1%, surpassing the UK market's growth rate.

• Insights from our recent growth report point to a promising forecast for Babcock International Group's business outlook.
• Unlock comprehensive insights into our analysis of Babcock International Group stock in this financial health report.

Make It Happen

• Unlock more gems! Our Undervalued UK Stocks Based On Cash Flows screener has unearthed 51 more companies for you to explore.Click here to unveil our expertly curated list of 54 Undervalued UK Stocks Based On Cash Flows.
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Searching for a Fresh Perspective?

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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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