How can we inform if a FTSE 100 inventory appears to be like low-cost? A method is to hunt out share costs which have fallen this yr, and that brings Related British Meals (LSE: ABF) into view.

The shares are up from their 52-week low in March, however we’re nonetheless taking a look at a 12-month fall of 20%.

Too many pies?

A few of the weak point must be down to retail fears going through the corporate’s Primark excessive road chain. We even have at a set of 5 totally different enterprise right here, with Grocery, Substances, Sugar, and Agriculture divisions added to Retail.

That brings diversification, which is an effective factor. However it may well additionally recommend an organization lacks focus, and prime administration need to maintain their eyes on quite a few balls.

With first-half ends in April, CEO George Weston stated he was “frustrated with the results in our Sugar business.” However the different 4 are doing high-quality, consistent with full-year steerage. The replace gave the share price a lift on the time.

The long run

Forecasts point out a fall in earnings per share for the complete yr, and that must be holding the inventory again. However analysts count on a return to earnings development that might drop the price-to-earnings (P/E) ratio to beneath 9.5 by 2027.

Related British Meals had internet debt of £2.8bn at 1 March, up from £2.5bn a yr beforehand. In opposition to a market cap of practically £15bn, that doesn’t fear me an excessive amount of. Nevertheless it’s value keeping track of.

There’s danger from retail publicity, and a presumably perceived lack of focus. However I believe long-term buyers ought to take into account it.

Valuation

In search of FTSE 100 shares on low P/E valuations can even throw up candidates. And that pulls my consideration to M&G (LSE: MNG). M&G appears to come back up in a variety of my searches on various factors, like its large 8.3% forecast dividend yield.

There’s a forecast P/E of 10 on the playing cards for the present yr. And a mooted restoration from the previous couple of powerful years might see it drop near eight by 2027.

Funding administration corporations are sometimes on decrease P/Es and might be cyclical. However the predicted earnings development over the following few years ought to cowl the dividends, that are additionally anticipated to rise. The quilt is likely to be a bit skinny although.

Robust outlook

With 2024 outcomes launched in March, CEO Andrea Rossi spoke of “two new targets for 2025-2027: to develop adjusted working revenue earlier than tax on common by 5% or extra every year, and to generate £2.7 billion of working capital.“

The boss added: “I am delighted to announce that today we are moving to a progressive dividend policy, starting with a 2% increase for the 2024 total dividend per share.” That each one sounds ambitiously optimistic.

However the danger hasn’t gone away. The world appear to be lurching from one trade-related financial crunch to a different on an nearly day by day foundation. And if M&G’s dividends can’t maintain up with inflation, the shares might take one other knock. However I see a good likelihood of a bull run right here and really feel it’s value a more in-depth look.