Momentum is building behind this well-established FTSE 250 growth share, as its performance strengthens across key areas.
However, I believe the market has yet to fully reflect this outlook, leaving the valuation looking increasingly disconnected from reality.
So, how compelling an opportunity is this to me now?
Rising earnings growth momentum?
Investment management giant Man Group’s (LSE: EMG) earnings growth is driven by strategic expansion, operational momentum and disciplined capital allocation.
A risk here is any global liquidity squeeze resulting from a prolonged spike in market volatility. It could prompt outflows in assets under management (AUM) and squeeze profit margins.
However, its latest annual results (2024) saw core profit before tax grow 39.1% year on year to $473m (£349m), with performance fees increasing 72.2% to $310m. Core net management fee revenue rose 14% to $1.1bn, while AUM edged higher to $168.6bn.
Man Group’s July 2025 acquisition of US private credit specialist Bardon Hill is also strategically important. It gives it access to one of the fastest-growing, highest‑margin segments in asset management. As such, it should allow the group to improve fee margins and add a more stable, less market-sensitive earnings stream.
Meanwhile, its heavy investment in technology and automation means incremental AUM can be handled at relatively low marginal cost, supporting margin expansion even in volatile markets.
Against this backdrop, the consensus analysts’ forecast is that Man Group’s earnings will grow by 32.7% a year to end-2028.
How undervalued is the stock?
A discounted cash flow (DCF) analysis identifies where shares should trade by ‘discounting’ projected future cash flows back to today. These flows also reflect the consensus analysts’ earnings growth forecast.
Let us assume that the 32.7% a year projection is right, although it is not set in stone. Using a discount rate of 8.5%, my DCF model estimates Man Group is 42% undervalued at its current £2.61 price.
Therefore, its ‘fair value’ could secretly be around £4.50 per share.
This is crucial, as asset prices tend to converge to their ‘fair value’ over time. So, it suggests a potentially terrific buying opportunity to consider, if those analyst forecasts prove accurate.
A rising dividend yield too?
Man Group’s current dividend yield is 4.9%, against the FTSE 250’s 3.5% average. That said, the consensus analysts’ forecast is that this will rise to 5% this year, 5.2% next year, and to 5.6% in 2027. This reflects the fact that yields can alter over time, with share price and annual payout changes.
Nonetheless, a £20,000 investment on a 5.6% average would make £14,968 in dividends after 10 years. This also assumes the dividends will be invested back into the stock, known as ‘dividend compounding’.
Over 30 years on the same basis this would rise to £86,893. At that point, including the £20,000 original investment, the holding would be worth £106,893. And that would pay investors an annual dividend income of £5,986!
My investment view
I believe Man Group offers a powerful combination of accelerating earnings, a more resilient fee base, and a deeply discounted valuation.
Its scale, growing operating leverage and growing private‑credit exposure give it solid long-term foundations as a serious growth share, in my view.
As such, I will add to my holding in the firm soon and think it well worth other investors’ consideration too.
