4 UK Value Stock Picks

These four stocks are currently trading at less than their fair value estimate and feature on Morningstar analysts’ Global Best Ideas List

Alex Morozov, CFA 3 December, 2018 | 2:23PM
Facebook Twitter LinkedIn

Morningstar equity analysts believe that a company’s intrinsic worth results from the future cash flows it can generate. The Morningstar Rating for stocks identifies stocks trading at a discount or premium to their intrinsic worth, or fair value estimate, in Morningstar terminology. The following four stocks are currently trading at less than their fair value estimate and feature on the analysts’ Global Best Ideas List of undervalued equities.

G4S (GFS)

Global security leader G4S has fallen more than 25% from its 2017 peak on the back of concerns about its India and Middle East business and resultant cuts to full-year revenue growth guidance. However, this division generates just 11% of group revenue and 15% of EBITA, and we believe many of the issues highlighted by investors in this business are short term in nature and do not pose a significant structural risk.

Longer term, we believe the ongoing restructuring program can further simplify the business and remove costs, and structural improvements as the largest players in the industry shift toward higher-value activities should go some way to improving revenue growth and operating margins for G4S. We see material upside to our fair value estimate.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Royal Dutch Shell PLC B1,556.40 GBP0.00Rating
Vodafone Group PLC109.62 GBP0.00Rating
WPP PLC1,053.50 GBP0.00Rating

About Author

Alex Morozov, CFA  Alex Morozov is the director of the health-care team at Morningstar.