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One way to value a stock is by looking at the price-to-earnings (P/E) ratio. This allows an investor to compare FTSE shares on a level playing field. In theory, the lower the ratio, the more undervalued a stock could be. Here are two examples I’ve spotted that look attractive.
A US expansion focus
First up is JD Sports (LSE:JD). It has a P/E ratio of 9.79, with the stock down 3% in the past year.
In terms of why it could be undervalued, I think the market could be overlooking some of the company’s longer-term strengths. This is particularly related to its international growth opportunities and ability to benefit from a recovery in consumer spending.
One attraction is its strong position in the global sportswear market. JD has established relationships with major brands such as Nike and Adidas, while its expansion across North America and Europe provides opportunities to grow revenues beyond the UK.
The acquisition of US retailer Hibbett has also significantly expanded its American footprint. As integration progresses, I think there’s scope to improve operational efficiency and profitability.
I also think the stock has been partly overlooked due to recent low consumer demand. Sportswear sales have faced pressure from cautious shoppers. However, these headwinds won’t necessarily last forever, and this is another factor why the stock looks cheap right now.
If consumer confidence improves and demand for premium trainers recovers, JD could benefit from higher sales and improved margins. When I compare that outlook with the low P/E ratio, I think they’re mismatched.
There are risks though. First-half profits fell almost 20%, while weak US demand and deep discounting continue to squeeze profitability. JD also remains heavily exposed to Nike, making the pace of its product recovery important.
Tapping a growing market
Another option is Prudential (LSE:PRU). The share price has fallen 9% over the past year, leaving the insurance giant trading at 903p. However, I think the sell-off has created an interesting opportunity for investors looking for an undervalued FTSE 100 stock.
What catches my attention is the P/E ratio of 7.84. That looks relatively cheap for a business with substantial exposure to some of the world’s fastest-growing insurance markets.
Unlike traditional UK insurers, Prudential focuses on Asia and Africa, where rising incomes and the expanding middle class provides attractive long-term growth opportunities.
The latest results reinforce my optimism. During the first half of 2026, new business profit increased 8% to $1.38bn, while adjusted operating profit climbed 9% to $1.81bn. Adjusted earnings per share also jumped 17%.
These are encouraging numbers, particularly given the challenging economic backdrop.
Another positive is the company’s commitment to returning capital to shareholders. Management’s expanded its 2026 share buyback programme to around $1.5bn, while increasing the interim dividend by 15%. Particularly on the income side, it could help support the share price while investors wait for the growth story to develop.
In terms of risks, Prudential remains exposed to economic uncertainty in China. This is where regulatory changes have already affected new business profitability. Currency fluctuations and weaker investment markets could also undermine earnings.
Yet on balance, I think both stocks could be considered by investors who are looking for potential value purchases right now.
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Jon Smith has no positions in the shares mentioned.
This story originally appeared on Motley Fool
