I reckon I’ve found one of the cheapest UK shares around. And yet it’s rarely talked about on social media, seldom appears on lists of brokers’ recommendations, and only occasionally hits the financial headlines.
Which company am I talking about? And why do I think its stock’s so cheap? Let’s find out.
Who?
Frasers Group (LSE:FRAS), perhaps best-known for owning retailers Sports Direct and House of Fraser, is a stock that tends to fly under the radar. However, since Mike Ashley opened his first store in 1982, it’s grown enormously.
Although he’s no longer involved with the day-to-day management of the group – that’s been left to his son-in-law Michael Murray — Ashley still retains a shareholding estimated to be around 73%.
By looking at the group’s recent earnings releases we know that during the 52 weeks to 26 October 2025, its adjusted basic earnings per share (EPS) was 96.9p. This means the stock currently (27 March) trades on just 6.6 times historic earnings. For context, the five-year average (median) is 9.3.
And there’s more…
However, delve a little deeper, and the stock looks even cheaper. The group’s recent strategy of establishing minority positions in other retailers and brands has seen it build a sizeable portfolio of investments. At 26 October 2025, these were valued at £1.2bn. And because of the way they’re accounted for, plus the fact that some of them are loss-making, they contribute very little to the group’s overall trading performance.
If £1.2bn is removed from the group’s market-cap, it means Frasers’ trading on only 3.8 times historic earnings.
Not finished yet…
But that’s not all. Towards the end of 2025, the group acquired two properties, the Braehead Shopping Centre and the Swindon Designer Outlet Centre. Although the group hasn’t revealed how much it paid, reports suggest they cost £220m and £145m respectively. If these figures are also removed from the group’s current stock market valuation, its price-to-earnings (P/E) ratio drops to only three. That’s incredibly low for such a large — and profitable — group.
Of course, all my calculations are based on backwards-looking earnings and it’s clear that many of the UK’s retailers are struggling at the moment. Squeezed incomes and increased employment costs are affecting Frasers’ top and bottom lines.
However, even if EPS fell quite significantly in the current financial year, I still think the stock looks cheap. Analysts have set a 12-month share price target of 753p, suggesting that the group’s potentially undervalued by around 18%. As recently as July 2024, its shares were changing hands for close to 900p.
It’s difficult to know why the group’s so unloved. I suspect it’s viewed as being a bit old-fashioned. After all, it’s as far removed from the tech sector as you can probably get. It’s also UK-centric, which means it’s reliant on a domestic economy that’s a little shaky at the moment. Having one dominant shareholder probably doesn’t help either. And it’s a member of the FTSE 250, which means it can get overlooked.
Yet I still think Frasers’ stock is in bargain territory at the moment. And just one of many UK shares I believe are worthy of further consideration by value investors.
