THG Fell While Sales Rose

For THG shareholders, the loss from the start of the year was 40.5%, including dividends. If you had put money into THG on 1 January 2026 expecting FTSE 250 inclusion, index inflows and a demerger to re-rate the equity, this outcome probably feels jarring. The business has since reported rising first half revenue and a smaller loss. So what did the original case miss about modest 3% to 5% revenue growth, a 9% margin jump and a low single digit P/E all arriving within three years?

The useful thing about a Narrative is that the reasoning is checkable: the assumptions sit beside the argument, and together they imply an estimated Fair Value you can disagree with.

THG has already moved. See which of 8 high quality undervalued stocks still trade below our estimates.

The Argument You Would Have Been Weighing Up On THG

The shares cost £0.46 at the start of the period, and THG sat between two very different but plausible stories.

On the bullish side, the Narrative pointed to a Fair Value of £0.8. It rested on annual revenue growth of 4.8% and an eventual profit margin of 9.0%, with data led personalization and premium wellness seen as core drivers.

The more cautious view put Fair Value at £0.4. That scenario still assumed a 9.0% margin, but it focused on the risk that rising costs and intense promotions could pressure profitability, even if the FTSE 250 move helped liquidity.

What The Results Changed For The THG Narrative

THG’s H1 2026 figures gave both camps new data to chew on. Revenue moved from £783.425m in H1 2025 to £828.733m in H1 2026, while the loss narrowed from £66.094m to £43.679m and net margin rose from -8.4% to -5.3%. The improvement helped the optimistic case on direction, but profitability and the 9.0% margin thesis remain unproven.

The lesson is simple. When a story leans on margin recovery, treat net income and net margin as the primary checkpoints and see how quickly, or slowly, they move toward the quoted target at each result.

What You Would Be Paying For In THG Today

THG now trades at £0.28, with the year to date return from the start of the year a loss of 40.5%. The selected Narrative’s Fair Value sits above the current price and rests on THG turning operational change into better cash generation.

The distinctive bet is that AI, automation and a leaner model let Nutrition and Beauty revenue feed through to free cash flow. For the fall to look like an opportunity rather than a warning, a buyer today would need to believe those efficiency gains can persist while volumes hold up.

"The main thing that has to go right is that THG continues to grow Myprotein and Beauty volumes while keeping its leaner cost base, AI driven efficiencies and lower capex structure intact, so that revenue growth feeds through into stronger free cash flow."

One Narrative disagrees with today's price. → See where this Narrative says THG should trade

Which Company Could Surprise You Next?

The next headline does not have to be where your research begins. Go straight to the companies and see whether a contrarian opportunity could be taking shape.

• Company 1 - 19% below our estimate - targets repeat supplement purchases through a scalable distributor led expansion model.
• Company 2 - 28% below our estimate - uses a unified technology platform and AI tools to support self directed investors.
• Company 3 - 24% below our estimate - attracts senior lawyers into a dispersed tech based structure that cuts overhead costs.

Those are three of them. See every one of the 9 solid balance sheet companies →

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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