For much of this year, shares in JD Sports (LSE: JD) have been selling for pennies each. But recently, the JD Sports share price has been hovering around the pound mark.
As a shareholder, I have been happy to see the price move up lately. But it is still only 5% higher than at the start of 2025 and has tumbled by a third over five years.
Given that performance, might the recent move above the pound level mark a turnaround in the company’s fortunes?
Seems like a bargain
Part of me thinks that it ought to, as the JD Sports share price looks like a bargain. The global retailer sells on a price-to-earnings ratio of just 10.
But the problem is that, just as I thought the share has looked cheap this year, I had the same opinion last year – and the year before that!
It has long seemed to me that the share price does not reflect JD Sports’ excellent long-term commercial potential, given its proven business model, strong brand appeal for its target audience, large customer base, and expansion plans.
Have I missed something?
Still, while I have long seen JD Sports selling for what I thought was a bargain price, clearly not everyone has viewed things that way. Indeed, that helps explain why the share has spent much of this year selling for pennies.
A series of profit warnings over the past several years help to explain some of that scepticism. On top of that, a weak economy hurting consumers’ willingness to splash out on pricy trainers is a risk.
JD Sports previously did well despite that economic risk, but this year has seen more evidence of shoppers holding back. First-half sales rose by 18% year on year, but that impressive headline figure reflects a much larger number of shops. Like-for-like sales in the period actually fell 3% year on year.
So, there are worries about what an uncertain economy may mean for the company – and also whether its aggressive (and costly) expansion over the past few years will turn out to be worthwhile in financial terms.
I’m holding
Overall, I remain upbeat.
I have sold a few of my shares to take some profit off the table as the share price rose. But it remains a key holding in my portfolio and for now I have no plans to sell any more shares.
Over the long term, I think the share price may be able to stay above the pound level – and hopefully well above it.
The expansion strategy of recent years has delivered strong results when it comes to revenues. The business now needs to prove it can also boost profitability.
With the expense of opening hundreds of new shops a year now winding down, hopefully that will happen over the coming year or two.
If it can avoid any more profit warnings and improve investor confidence, I think the business merits a higher valuation.
