Picture supply: M&S Group plc
Figuring out probably undervalued shares is the key to being profitable along with your investments. Actually, this has been the strategy of lots of the world’s most profitable buyers. Moreover, by specializing in firm fundamentals akin to competitiveness and steadiness sheet energy, we are able to determine alternatives that different firms could also be overlooking.
Nevertheless, based mostly on that, marks and spencer(LSE:MKS) makes the retailer the costliest inventory previously 12 months. FTSE100. Certainly not? Let’s take a more in-depth look.
calculate numbers
For the 52 weeks to 27 September 2025, British Icon reported underlying earnings per share (EPS) of 0.9p. As of February eleventh, as I write, the share worth was just below 382p, that means the corporate trades at a formidable P/E of 424 occasions earnings. This places the corporate on the prime of the FTSE 100 league desk when it comes to worth/earnings ratio (P/E). By anybody’s requirements, that is extremely costly.
Nevertheless, throughout this era M&S suffered a devastating cyberattack from which it has but to completely get better. This resulted in distinctive prices estimated to be within the area of £140 million. Added to this was a lack of income (and revenue) as the web site was unavailable for a number of weeks.
Moreover, web debt elevated from £1.79 billion to £2.53 billion from 29 March 2025 to 27 September 2025. Having mentioned that, the group nonetheless maintained a web money place on the finish of the interval, excluding lease liabilities.
For apparent causes, firms desire to report adjusted earnings that take away the affect of those (hopefully) one-off occasions. This offers us an adjusted EPS of 23.8p and a P/E ratio of 16. All of a sudden, British retailers appear to be a extra engaging prospect.
That is most likely why analysts have set a 12-month worth goal of 15% greater than the present share worth. Berenberg mentioned the inventory trades at simply 10 occasions anticipated March 2027 earnings. The financial institution additionally expects the cashflow potential will enable M&S to enhance its dividend yield to three% to 4%. However this appears formidable to me, given the historic (previous 12 months) return of 0.9%.
Persistence is the important thing
Nevertheless, whereas the group is definitely in a greater place to face up to new cyber-attacks, I believe it can take a while earlier than investor confidence is totally restored. M&S’s standing as a much-loved British model and its profitable efforts to shed its picture as a awful clothes retailer are conserving customers coming again.
The group reported report numbers of shoppers visiting throughout the Christmas season. The boss mentioned:Meals gross sales had been robust and the enterprise continued to carry out properly, attaining a brand new market share milestone for the interval.” he added encouragingly.Style, dwelling and sweetness are getting again on observe as we transfer by the ultimate levels of restoration”
The meals aspect of the enterprise continues to be a star performer. And to reap the benefits of weight reduction medication that result in decreased urge for food, we now have launched the “Nutritious Dense” sequence. Additionally, a 50:50 three way partnership with the corporate ocadogoes very properly. It’s at the moment the UK’s quickest rising grocer.
When you consider it, it is laborious to imagine that Marks & Spencer is probably the most overvalued inventory within the FTSE 100. In distinction, we predict this could possibly be among the best bargains. Because of this, I believe it is a restoration inventory that long-term buyers ought to contemplate.