Is JD Sports Fashion (LON:JD.) a Buy at Its Current Undervalued Price?

The question of whether JD Sports Fashion (LON:JD.) is a compelling buy at its current valuation hinges on a nuanced interplay of financial metrics, strategic execution, and macroeconomic headwinds. As of November 2025, the stock trades at 84.44 GBP, with a trailing P/E ratio of 7.89 to 9.44, significantly below its 10-year average of 24.74. This stark discount suggests the market is pricing in pessimism, but a closer look at the company's fundamentals and growth levers reveals a potential re-rating opportunity.

Intrinsic Value and Earnings Momentum

JD Sports' valuation appears disconnected from its revenue performance. For the fiscal year ending February 1, 2025, the company reported £11.458 billion in revenue, a 10.2% increase year-over-year, with organic sales growth of 6%-well above the estimated market growth of 3.8%. This outperformance is driven by its multi-brand model, which has allowed it to capitalize on trends in sports and lifestyle retail. However, earnings have lagged, with a 9.09% decline in 2024 and a 13.5% drop in profits in the first half of 2026 according to market data. The disconnect between revenue and earnings growth reflects margin pressures from acquisitions and a challenging consumer environment.

The company's trailing twelve-month EPS of 12.39p according to market data and a P/E ratio in the low single digits suggest the stock is trading at a discount to its earnings power. For context, a P/E of 7.89 implies the market expects JD Sports to generate only 7.89 GBP of earnings for every 100 GBP invested in the stock-a historically low multiple that may not fully account for its long-term growth potential.

Strategic Expansion and Operational Efficiency

JD Sports' aggressive expansion strategy is a key catalyst for future growth. The company plans to open 250–350 new stores annually, with a focus on the US and international markets. Recent acquisitions, including Hibbett and Groupe Courir, have expanded its store count to 4,850, with 700 new US stores projected over the next four years according to growth strategy reports. These moves are not just about scale but also about diversifying its customer base and reducing reliance on any single region.

Technological investments further bolster its competitive edge. Initiatives like the "JD Now" app and a cloud-based HR system aim to enhance customer engagement and operational efficiency. These efforts are critical in a sector where margin compression is a persistent risk. The company's 47.8% gross margin, while slightly down from 48.0% in the prior year, remains robust given the promotional nature of the market according to financial results.

Market Sentiment and Analyst Outlook

Analyst sentiment is mixed but cautiously optimistic. In the past three months, 17 analysts have issued "buy" ratings, while others remain neutral according to trading platform data. Price targets range from 84.00 GBX to 200.00 GBX, with an average of 107.81 GBX according to forecast analysis. This implies a potential upside of 27% from the current price, assuming the stock converges with the average target. The upward revision of some price targets-from 92 GBp to as high as 155 GBp-reflects growing confidence in the company's ability to navigate macroeconomic challenges through strategic acquisitions and cost discipline.

However, the stock's beta of 1.40 according to stock analysis and recent volatility of 3.15–3.29% according to trading data highlight its sensitivity to market swings. This volatility could work against the stock in a downturn but also amplifies gains if the company executes its growth plan.

Risks and Re-Rating Catalysts

The primary risks include macroeconomic headwinds-rising unemployment, strained household budgets, and currency fluctuations-which could dampen consumer spending. Additionally, JD Sports' reliance on major brands like Nike and its debt load from acquisitions pose operational risks according to market analysis.

That said, several catalysts could drive a re-rating:
1. Share Buybacks: The company's £100 million buyback program signals management's confidence in its intrinsic value according to market narratives.
2. Margin Stabilization: Improved cost management and a shift toward full-price sales could restore earnings momentum.
3. US Market Penetration: Success in expanding its North American footprint could unlock new revenue streams.

Conclusion: A Buy for the Long-Term

JD Sports Fashion is undervalued by historical standards, with a P/E ratio that fails to reflect its strong revenue growth and expansion potential. While short-term earnings pressures and macroeconomic risks are valid concerns, the company's strategic investments, disciplined execution, and robust balance sheet position it to outperform in a recovering market. For investors with a 2–3 year horizon, the current valuation offers an attractive entry point, particularly if the company can stabilize margins and deliver on its store expansion targets.