3 UK Stocks Estimated To Trade At Up To 42.2% Below Intrinsic Value
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The United Kingdom's FTSE 100 index has recently experienced a downturn, influenced by weak trade data from China and falling commodity prices. In this challenging market environment, identifying undervalued stocks can be crucial for investors seeking opportunities; here are three UK stocks estimated to trade up to 42.2% below their intrinsic value.
Top 10 Undervalued Stocks Based On Cash Flows In The United Kingdom
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| TBC Bank Group (LSE:TBCG) | ￡30.60 | ￡58.41 | 47.6% |
| Gaming Realms (AIM:GMR) | ￡0.40 | ￡0.76 | 47.6% |
| Liontrust Asset Management (LSE:LIO) | ￡6.47 | ￡12.31 | 47.4% |
| Topps Tiles (LSE:TPT) | ￡0.475 | ￡0.91 | 47.5% |
| Marks Electrical Group (AIM:MRK) | ￡0.65 | ￡1.27 | 49% |
| C&C Group (LSE:CCR) | ￡1.546 | ￡3.00 | 48.5% |
| AstraZeneca (LSE:AZN) | ￡130.00 | ￡250.41 | 48.1% |
| Mercia Asset Management (AIM:MERC) | ￡0.35 | ￡0.68 | 48.3% |
| Foxtons Group (LSE:FOXT) | ￡0.652 | ￡1.22 | 46.4% |
| Franchise Brands (AIM:FRAN) | ￡1.82 | ￡3.61 | 49.6% |
Let's take a closer look at a couple of our picks from the screened companies.
Airtel Africa
Overview: Airtel Africa Plc, with a market cap of ￡4.23 billion, offers telecommunications and mobile money services across Nigeria, East Africa, and Francophone Africa.
Operations: The company's revenue segments include $858 million from Mobile Money and $4.10 billion from Mobile Services, with a segment adjustment of -$196 million.
Estimated Discount To Fair Value: 20.4%
Airtel Africa is trading at ￡1.14, significantly below its estimated fair value of ￡1.43, indicating it may be undervalued based on cash flows. Despite high debt levels and a dividend not well covered by earnings, the company shows strong profit growth forecasts of 39.42% per year, outpacing the UK market average. Recent buybacks and improved net income to $7 million from a $170 million loss last year further enhance its financial position.
Rank Group
Overview: The Rank Group Plc, with a market cap of ￡365.38 million, provides gaming services in Great Britain, Spain, and India through its subsidiaries.
Operations: The company's revenue segments include Mecca (￡138.90 million), Digital (￡226 million), Enracha Venues (￡38.50 million), and Grosvenor Casinos (￡331.30 million).
Estimated Discount To Fair Value: 42.2%
Rank Group's recent earnings report shows a significant turnaround, with net income of ￡12.5 million compared to a net loss of ￡96.2 million last year. Trading at 42.2% below its estimated fair value of ￡1.35, the stock appears undervalued based on discounted cash flows (DCF). Revenue growth is forecasted at 5.9% per year, outpacing the UK market average, while earnings are expected to grow significantly at 35.7% annually over the next three years despite low return on equity forecasts and high one-off items impacting results.