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The FTSE 250 is on an average price-to-earnings (P/E) ratio now of only around 11.5. To me that suggests the mid-cap index, which is typically home to a lot of growth share prospects, is undervalued.
Today, I’m looking at three FTSE 250 stocks with P/E multiples significantly lower than that.
B&M European Retail, P/E = 7.9
The retail industry still faces serious economic challenges. But seeing B&M European Retail (LSE: BME) with a forecast P/E of 7.9 makes me think I could be eyeing up a bargain. And then, forecasts would see it drop to around 6.7 by 2027, with annual earnings and dividends expected to grow steadily.
But that would follow an earnings decline in 2025, results released on 4 June showed. And if forecasters downgrade their outlooks at all, we might see more share price weakness.
Still, the owner of the B&M and Heron Foods chains raised its dividend 2%. And we have a 5.6% dividend yield showing on the forecasts, which would be covered more than twice by expected earnings.
Maybe the focus on low-cost shopping could lose some attraction when the economic outlook improves. But at today’s valuation, I see a safety margin. It has to be worth a careful look.
Lion Finance Group, P/E = 4.8
Bank of Georgia changed its name to Lion Finance Group (LSE: BGEO) in February. The change was “to reflect our focus on multiple geographies” after the company expanded into Armenia with the acquisition of Ameriabank.
The share price is up over 500% in the past five years. And even after that, we’re still looking at a forecast P/E of only 4.8. What’s more, analysts expect rises in earnings between now and 2027 to push the P/E as low as 3.8.
But that earnings rise comes after an expected dip this year. So maybe that’s one thing holding the shares back from even bigger gains. At least the predicted 3.7% dividend yield should be strongly covered by earnings.
The risks? Eastern European political conflict, uncertain investment security… it’s part of the world that a lot of investors wouldn’t go near. But at that valuation, it’s surely got to be worth considering.
Safestore Holdings, P/E = 9.5
A P/E of 9.5 might not appear much lower than the index. But forecasts for Safestore Holdings (LSE: SAFE) show it falling below eight by 2027.
The past few years have been tough as high inflation has hit the self-storage business. Also, being a property-based business, Safestore has had a rocky ride since its stock market flotation in 2007 — just before the financial crisis.
I might expect the share price to remain under pressure at least until investors see how the 2025 year turns out, with the year not ending until October. And we might need to see some insights into the potential recovery expected to kick off in fiscal 2026.
But this is another company in what I believe to be a solid business. And I think its stock valuation demands close scrutiny.
