Investing.com — Even after two years when Retailers index suffered a sharp de-rating amid inflation fears, valuations in the UK consumer sector remain subdued, even as signs of a potential rebound emerge.
Berenberg highlighted that All-Share Retail index earnings per share are up 23% over the past two years, while the 12-month forward P/E has risen from a low of c9x in September 2022 to 11.5x currently.
Despite this recovery, valuations across many UK consumer stocks remain significantly discounted.
Pre-COVID-19 averages show current valuations are, on average, 13% lower, and the discount deepens to 20% excluding standout performers like Marks & Spencer (OTC:). Some companies, including B&M, Card Factory, Currys, JD (NASDAQ:) Sports, and Origin Enterprises, trade at more than a 30% discount.
Analysts expect a brighter outlook for UK consumer spending by 2025, underpinned by real income growth and easing household savings ratios. While consumers remain cautious, the November uptick in GfK’s UK Consumer Confidence Index offers encouraging signs for an acceleration in retail sales growth.
Among top stock picks for 2025, UBS highlighted B&M, Card Factory, Currys, Dunelm, JD…
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