39 in the last 12 months FTSE100 stocks fell and 61 rose. In total, the indicator increased by approximately 10%. This is well above the five-year average of 6.2%.

But it wasn’t a good year Frasers (LSE:FRAS).

In early 2024, shares of the sports retailer were changing hands at 910p. At the time of writing (December 13), the company’s share price is 620p. This represents a decline of 32% in less than 12 months.

Much of the damage occurred on December 5, when the company announced that it now expected adjusted pre-tax profit for the year ending April 27, 2025 (FY25) to be between £550m and £600m. This is less than the previous forecast of £575-625 million.

Investors got scared, losing 10.7% of the company’s value. Frasers blamed “weaker consumer confidence” while respecting the budget and warned that it faces additional “incremental costs” worth £50 million in FY26, as a result of the Chancellor’s plans.

However, despite this needy run, it has been the twelfth best performer on the FTSE 100 over the past five years.

Pros and cons

But the stock looks low-cost to me now.

Even at the lower end of expectations for FY25, assuming a 25% corporate tax rate, the company’s earnings per share would be 91.6p. This means that the forward price-to-earnings ratio will be just 6.9.

If the company managed to achieve the upper end of its forecast, the multiple would drop to 6.

In either case, I think it’s quite a bargain. According to Eqvista, the average for clothing and footwear retailers is 17.8.

However, there are some risks.

We have already seen that a company’s share price can fluctuate. This can be partly explained by the vast shareholding (73.3%) still held by Mike Ashley, the group’s founder. This means there are relatively few shares available to other investors. A vast transaction may therefore have a disproportionate impact on the share price.

I also wonder if company executives are easily distracted. Thanks to its numerous shareholdings in other listed companies, Frasers resembles an investment holding company. It is not known whether it intends to announce offers to take over any of them. But the speculation certainly makes for captivating reading.

Finally, I believe that the Christmas season is crucial. Frasers published its half-yearly report on December 5, so it’s likely the company will have a good idea of ​​how Christmas trading is performing compared to previous years. This likely had an impact on the profit warning, which gives me cause for concern.

Final thoughts

However, despite these concerns, I believe the stock offers good value. The company has a proven track record of growth, increasing its revenues by £1.4 billion (40%) over the last five financial years.

However, I do not want to take any position at this time.

That’s because I have shares in JD sports fashionanother sporting goods retailer listed on the FTSE 100. The two companies are too similar, which means I would be heavily associated with one sector, which is never a good idea.

To illustrate how closely related they are, JD Sports’ share price – as of December 2023 – is the worst performer on the FTSE 100 (third worst is Frasers).

So I’m going to wait this out.