The FTSE 100‘s risen 22% over the last year, reflecting strong investor appetite for value stocks to buy. The trouble is that many blue-chip stocks are now looking mightily expensive.
Not all FTSE shares have seen spectacular gains, though. Bunzl (LSE:BNZL), Pearson (LSE:PSON) and Diageo (LSE:DGE) shares have plummeted for one reason or another during the last 12 months. This means their forward price-to-earnings (P/E) ratios have dropped below the long-term average.
Does this make them brilliant bargains to consider or classic value traps? Let’s take a look.
Bunzl
Bunzl’s share price has been the FTSE 100’s worst performer over the past year. Down a whopping 37%, it’s plummeted as margins have been squeezed by rising costs and surging competition.
As a result, the support services provider now trades on a forward P/E ratio of 15.1 times. That’s below the 10-year average of around 18 times.
Does this represent an attractive entry point for share pickers? Possibly, though that isn’t the sort of discount that turns heads. On balance, I think Bunzl shares are worth a close look today.
Margin pressures remain a threat. But as interest rates drop and end markets improve, I think it could rise strongly in 2026. Bunzl tipped “moderate revenue growth… at constant exchange rates” this year. Recent acquisitions could also give sales a shot in the arm.
Pearson
Pearson carries a similar forward P/E ratio, at 14.9 times. Yet in this case, the textbook publisher’s multiple is just below the 10-year average.
As a producer of educational material for schools, colleges and universities, it’s been hit hard as institutions have trimmed their budgets. It’s also suffering due to severe market competition — its shares slumped again this month after announcing the loss of a major US student assessment contract in New Jersey.
My main concern for Pearson, though, is the growth of artificial intelligence (AI) and what this means for long-term growth. The FTSE firm’s building and rolling out its own AI tools to capture rising demand. And it’s seeing some success. Still, I see this new technology as more of a threat than an opportunity.
I’ll therefore be avoiding the FTSE 100 firm right now.
Diageo
Could Diageo shares be a better buy for bargain hunters? Down 30% over the last 12 months, the Guinness manufacturer trades on a forward P/E ratio of 13.2 times.
That’s far below the 10-year average of 20.8. With a new chief executive at the helm, I think 2026 could prove a transformative year for Diageo and its share price. Under new head Dave Lewis, cost reductions, brand divestments and a refocused sales strategy could all help the company break out of its long-term downtrend.
I’m also hopeful that falling interest rates will help rejuvenate demand for its premium drinks. As an investor myself, though, I’m mindful that declining alcohol consumption in its Western markets could hamper any recover.
While it’s not without risks, I think Diageo shares could — at current prices — be one of the best recovery stocks to consider buying today.
