A FTSE 250 share that offers growth, dividends AND value!

This FTSE 250 share has struggled due to poor conditions in the advertising market. But Royston Wild thinks it could be about to storm back.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

ITV (LSE: ITV) has struggled due to challenging market conditions in recent years, as demonstrated by its demotion from the FTSE 100 in 2022. But things are looking up for the FTSE 250 share, and I think now could be a great time to consider investing.

Here’s why I think the company’s one of the London stock market’s best ‘all-rounders’.

Growth

ITV’s earnings record’s been less than impressive since the end of the 2010s. Indeed, the broadcaster’s bottom line’s dropped during four of the past five years. It’s suffered primarily as higher interest rates and an economic slowdown have struck advertising revenues.

Should you invest £1,000 in Big Yellow Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Big Yellow Group Plc made the list?

See the 6 stocks

But signs of improvement in the ad market mean City analysts think earnings are poised for a strong and sustained turnaround:

YearEarnings per shareEarnings growth
20249.14p17%
20259.72p6%
202610.69p10%

Brokers are also confident in the profits potential of other parts of ITV. Strong momentum at its ITVX streaming platform (where streaming hours grew 15% in the first half) should give the bottom line a lift.

Further progress is also anticipated at the company’s ITV Studios production arm where record profits are anticipated this year. The broadcaster’s targeted average organic revenue growth here of 5% between 2021 and 2026.

Dividends

Like earnings, dividends at ITV have been extremely volatile in recent years. They were axed entirely during the pandemic before returning and rising. Payouts were then frozen in 2023.

However, with profits expected to rise again, dividends are predicted to also ascend from last year’s 5p reward:

YearDividend per shareDividend growth
20245.03p1%
20255.14p2%
20265.29p3%

Dividends are never guaranteed. But ITV’s robust balance sheet means it looks in good shape to meet current projections. Its net debt to EBITDA ratio fell to 0.9 as of June.

Predicted payouts are also well covered by anticipated earnings. Dividend cover ranges 1.8 times to 2 times between 2024 and 2026.

Value

Current earnings forecasts mean ITV shares offer excellent value across a variety of metrics. The price-to-earnings (P/E) ratio is 8.8 times for 2024, and 7.8 times and 7.1 times for 2025 and 2026 respectively. These ratios are way below the FTSE 250 average of 14.5 times.

The price-to-earnings growth (PEG) ratio meanwhile, is 0.5 for this year. Any reading below 1 indicates that a share is undervalued.

Finally, the dividend yield for this year is 6.6% and rises to 6.8% and 7% for 2025 and 2026 respectively. The average FTSE 250 yield sits way back at 3.2%.

A top stock

Like any share investment, buyers today take on a degree of risk by acquiring ITV shares. Another downturn in the ad market, for instance, could weigh on earnings and dividends. The business also faces huge competition from other broadcasters and from streaming giants like Netflix and Amazon.

However, these risks seem to me to be outweighed by the potential benefits of owning the broadcaster’s shares. I think ongoing expansion at ITV Studios and investment in streaming in particular could deliver exceptional long-term returns to investors.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon and ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »