The FTSE 250 is awash with undervalued shares. Personally I put this down to a mixture of things, together with concern concerning the UK financial system, an absence of obtainable information for retail traders, and the outperformance of US shares, which attracts capital stateside. This could imply shares should be distinctive to be able to stand out to traders. Currys (LSE:CURY) is one such inventory that has stood out. The shares are up 89% over 12 months and over 100% from their nadir. Regardless of this, it nonetheless continues to commerce under its pandemic-era highs.

What’s behind the rise?

Currys inventory has surged 89% over the previous yr, reflecting a big restoration pushed by bettering monetary efficiency and strategic positioning. The corporate’s Q3 buying and selling replace highlighted a 2% rise in like-for-like gross sales in the course of the Christmas interval, with robust demand for gaming and premium computing merchandise offsetting weaker TV gross sales. Notably, gross margins improved as a consequence of disciplined stock administration and development in higher-margin companies like credit score and options.

Furthermore, administration’s upwardly revised revenue steering, now projecting adjusted pre-tax earnings of £145m-£155m, exceeded market expectations. Moreover, lowered prices in depreciation, amortisation, and leasing additional supported this outlook. Buyers have been additionally inspired by the announcement of a dividend return after a two-year hiatus.

Wanting forward, Currys’ dominant market share in AI-enabled laptops positions it properly for future improve cycles, such because the 2025 Home windows refresh. This strategic benefit underpins optimism for sustained development regardless of near-term challenges.

Nonetheless good worth

The inventory stays attractively valued regardless of its spectacular restoration. At the moment, it trades at a trailing price-to-sales (P/S) ratio of 0.1 and a price-to-earnings (P/E) ratio of simply 5.2, signalling deep worth in comparison with the worldwide shopper discretionary sector median P/E of 18.6.

Ahead-looking metrics additionally spotlight its affordability. Whereas the ahead P/E is anticipated to rise to 10.8 instances as a consequence of one-time earnings in monetary yr 2024, this determine nonetheless represents a big low cost to the sector common.

Importantly, Currys boasts a ahead price-to-earrings-to-growth (PEG) ratio of 0.4, properly under the sector median of 1.7. This displays its extremely sturdy projected earnings per share development of 29.7% all through the medium time period.

The underside line on Currys

Analysts are optimistic, with the common price goal sitting at 119.5p, round 30% greater than the present share price. The truth is, the very best share price goal of 170p is a full 80% greater than the present market worth.

Nonetheless, there are dangers to remember. Considered one of which is the power, or lack of power, of the UK financial system. Rates of interest ought to proceed to fall, however any upshift in inflation and a plateauing of rates of interest might critically hurt shopper sentiment and doubtlessly dent gross sales.

Nevertheless, I like shares with momentum and that is actually certainly one of them. It’s one I’m going to think about shopping for. There’s clearly some proof it might push loads greater.