Often, some of the best shares to buy are among those with the weakest performance. That’s because when companies run into trouble, the negative reaction from investors can sometimes be overblown, especially if the issues are ultimately temporary.
Among the list of worst-performing UK shares in 2025 is Ultimate Products (LSE:ULTP). Since the start of the year, the company has seen close to 45% of its market-cap get wiped out. And while shares have bounced back slightly, the stock still trades close to a 52-week low.
The decline’s been so severe that the price-to-earnings (P/E) ratio now stands at just 7.7. For reference, the estimated P/E ratio of the UK stock market is closer to 18.7 as of September. What’s the reason for this 60% discount? And should investors be considering this stock as a potential bargain?
What happened?
Ultimate Products may not be a household name, but many of its brands can be found in British homes, such as Russell Hobbs and Salter.
Across its brand portfolio, the company designs, develops, and distributes a wide range of household appliances, audio devices, heating systems, and even collapsible laundry baskets. And its products can be found in supermarkets both in Britain and abroad.
Needless to say, it’s an established enterprise with a strong foothold in the retail market. The problem is that most of its products are often viewed as discretionary purchases. And in a macroeconomic environment where consumers are looking to avoid unnecessary spending, the group’s finances have been feeling the pinch. So much so that in June, management issued a profit warning that sent the stock crashing by almost 30% overnight!
This sudden downward volatility not only dragged the Ultimate products share price southwards to a 52-week low, but also a five-year low as well. However, now the damage is done, could this company present a potentially lucrative recovery investment?
To buy or not to buy?
Management isn’t blind to the adverse market environment it finds itself in. And while the company can’t control economic conditions, it has started taking action to adapt to them.
An operational restructuring is now underway to eliminate inefficiencies and offset the ongoing pressure on profit margins. At the same time, sales outside the UK are showing signs of resilience, pointing towards potentially stronger medium-to-long-term performance.
That’s certainly an encouraging trend. But it seems many analysts remain unconvinced. Inflation and tariff risks are expected to persist over at least the next two years. And with consumers likely prioritising discount hunting, the hopes for a rebound in Ultimate Products’ higher-margin portfolio are looking dim.
This all translates into a fairly pessimistic outlook of shrinking sales and earnings in 2026 and 2027. That’s the opposite of what investors want to see. And with that in mind, it’s not surprising to see this stock priced so cheaply as a result.
While disappointing, the bar’s been set extremely low. As such, if the group’s restructuring efforts deliver better than expected results, shareholders may see a sharp upward correction. Sadly, that’s far from guaranteed. And with other discounted UK shares in a much stronger position, Ultimate Products likely isn’t a top stock to consider buying right now.
Therefore, investors may want to look elsewhere for a potential bargain.
