Is There An Opportunity With Zigup Plc's (LON:ZIG) 44% Undervaluation?

Zigup Plc (LON:ZIG), the United Kingdom-based integrated mobility solutions platform, has seen its share price decline by 44% from its 52-week high, raising the question: is there an opportunity for investors? This article explores the company's fundamentals, valuation, and potential risks to determine if the current price represents a compelling investment opportunity.

Fundamentals and Valuation

Zigup Plc's fundamentals remain strong, with revenue growth of 23.05% in 2024 compared to the previous year. However, earnings growth has slowed, with a decrease of -10.21% in 2024. The company's earnings per share (EPS) are expected to grow by 3.6% per annum, and its dividend yield stands at an attractive 7.2%. Zigup's fleet assets have grown to £1.43 billion, and its leverage remains unchanged at 1.6x on the prior year.

Primary Risks and Challenges

Despite its strong fundamentals, Zigup Plc faces several risks and challenges that could impact its valuation and investment thesis:

1. Financial Risks: Zigup has a significant amount of debt, with net debt standing at £782.5 million as of H1 2025. High debt levels can increase the company's financial risk and may negatively impact its valuation if investors perceive the debt as unsustainable.
2. Operational Risks: In H1 2025, Zigup incurred exceptional costs of £2.8 million due to a cyber incident that primarily affected its legal business, NewLaw. Such incidents can disrupt operations, damage reputation, and impact financial performance, potentially affecting the company's valuation.
3. Market-related Risks: Changes in market conditions, such as economic downturns or fluctuations in demand for mobility services, can impact Zigup's revenue and profitability. For instance, in H1 2025, Zigup experienced a quieter summer period with lower levels of claims made to insurers, which affected its Claims & Services segment.

Investment Opportunity

Given Zigup Plc's strong fundamentals, attractive dividend yield, and the potential for earnings growth, the 44% undervaluation in its share price may present an opportunity for investors. However, it is essential to consider the company's risks and challenges, as well as the broader market conditions, before making an investment decision.

In conclusion, Zigup Plc's fundamentals and valuation suggest that there may be an opportunity for investors, but it is crucial to weigh the risks and challenges facing the company. By carefully evaluating the company's financial performance, operational efficiency, and market position, investors can make an informed decision about whether to invest in Zigup Plc (LON:ZIG) at its current valuation.