Down 11% this year, could the Marks and Spencer share price be a bargain?

Over the past five years, Marks and Spencer (LSE: MKS) shares have more than tripled in value. So far, though, 2025 has been much less impressive: the Marks and Spencer share price has fallen 11%.

Should I buy the share for my portfolio? My answer is no – for more reasons than one.

Having a feel for a business

I am surprised the share has done so well over the past five years, frankly.

When I go into a Marks and Spencer shop, I see quite a few things that make me question how in touch it is with what its shoppers’ wants.

But the business performance over the past several years has generally been more impressive than I expected. This makes me think that Marks is far more in touch with its customers than I am.

That alone makes me wary to put money into a share, as it suggests that deeply understanding what Marks and Spencer’s customer base may fall outside what my ‘circle of competence’, as Warren Buffett describes it. That could make it harder for me to assess the retailer’s prospects.

Leadership has delivered, but not always

Buffett also says that he likes to invest in business that could be run by an idiot, because sooner or later they may be.

I think Marks and Spencer’s management are far from idiotic — they have done an excellent job in many ways over the past few years. Last year, for example, revenue went up 6%, while profit before tax and adjusting items went up by 22%.

Adjusting items are real items in a profit and loss account, though – and performance was less impressive when including them. Profit after tax fell 31%. On balance, though, I remain impressed at the company’s sales growth in a difficult market.

This year, the company had a nasty cyber attack, in common with some other large retailers. What bothered me as a potential investor was how long it took to get even some basic products back on the shelves.

Undoubtedly management had its plate full dealing with that squalid episode, but seeing empty shelf upon shelf instore made me question whether the company is run in a resilient enough fashion.

I don’t see the valuation as attractive

That is an ongoing risk, though the same applies to many other companies too.

But another factor that puts me off investing in Marks and Spencer is its current share price.

The iconic brand still has legions of loyal shoppers, its performance in recent years has demonstrated it can more than keep up with the times, and I think its business is increasingly well-positioned for the digital age (partly thanks to it its tie-up with Ocado).

But is it worth 25 times earnings? I do not think so – and the 1% dividend yield hardly makes it more attractive to me.

The Marks and Spencer share price has had a brilliant five years, but I see it as overvalued and have no plans to invest.