It has been chalk and cheese for the FTSE 100 and FTSE 250 so far this year. While the blue-chip index has powered 17% higher, the latter has laboured, rising just 4.4%.
In some ways, this is understandable. FTSE 250 firms are far more exposed to the UK economy, which has hardly been firing on all cylinders for, well, seemingly forever now. As such, investor interest in UK mid-caps as a category remains weak.
However, sentiment for individual firms can quickly change. I’ve seen this with a couple of turnaround FTSE 250 shares I’ve highlighted this year — hydrogen stock Ceres Power and animal genetics firm Genus.
Year to date, they’re up 116% and 66%, respectively.
Europe’s leading rail app
Another turnaround candidate that sticks out to me in the FTSE 250 is Trainline (LSE:TRN). Its share price has crashed 43% since December 2024.
Trainline is Europe’s most downloaded rail app, with 27m users (around 18m in the UK). It earns commission and fees on ticket sales, as well as ancillary services like travel insurance and advertising.
In theory, as more people opt for digital bookings, this market-leading firm’s share price should be doing well. However, a massive regulatory dark cloud has been hanging over the tech firm.
Namely, the UK government’s plan to launch a ticketing platform under Great British Railways as part of broader rail industry reform. This could reduce Trainline’s dominance in the UK, making this an obvious risk.
On top of this, there’s the expanded pay-as-you-go contactless ticketing across more of the rail network. However, Trainline only expects this project to put around £150m of net ticket sales at risk (about 4% of its UK total).
Super-low valuation
Despite these potential challenges, I think there are a few things to like here. First, Trainline appears to have a sizeable long-term growth opportunity across multiple European markets.
Trainline is well placed to scale in continental Europe, particularly in Spain, France and Italy as carrier competition becomes more widespread over the next few years. The three markets generate industry passenger revenues of around €17bn per annum, expected to grow to €23bn by 2030.
Trainline.
Additionally, the company has a thriving business-to-business operation (called Solutions). This division provides ticketing technology and data to rail companies, operators and other travel apps.
In H1, Solutions saw net ticket sales grow 18%, with revenue 5% higher at £94m (around 40% of total group revenue). This high-margin unit makes up more than 50% of profits.
On its consumer app, Trainline has launched a personalised AI assistant, offering real-time rail travel advice, as well as agentic tools like refund processing without human intervention. I doubt Great British Railways’ app will prove as innovative (but I could be wrong).
It’s also encouraging to see the company buying back shares. In September, it launched a £150m programme, adding to its previous £75m buyback.
For FY26, ending February, the company expects net ticket sales growth of 6%-9%, and adjusted EBITDA growth of 10%-13%. So its hardly in dire straits.
Finally, the stock looks dirt cheap, trading at a forward price-to-earnings (P/E) ratio of just over 10 times. I can see why Berenberg analysts recently put a price target of 500p on Trainline.
That’s 104% above the current 245p — a price I think bargain hunters should note and I see it as one to consider.
