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The FTSE 250 is residence to some nice UK shares with cracking progress prospects. At present, I’m taking a look at RS Group (LSE: RS1), which has seen earnings wobble a bit over the previous few years. And that’s mirrored within the latest share worth efficiency.
However analysts are forecasting a return to progress. They predict we’ll see earnings per share climb 45% between 2025 and 2028. Oh, and so they have a mean short-term share worth goal of 695p penciled in. That’s 23% forward of the place we’re on the time of writing.
In order that’s a pleasant forecast mixture of earnings progress and share worth progress. Let’s dig deeper…
What it does
RS isn’t a reputation that’s more likely to be on many individuals’s lips. That’s largely as a result of it operates behind the scenes, supplying a variety of business and electronics services. The corporate covers design, manufacturing and upkeep.
It’s the form of firm I count on to endure some weak spot throughout a basic financial downturn. However with so many closely-connected enterprise strands, I additionally see robust restoration potential when the outlook brightens.
At full-year outcomes time earlier in 2025, chief govt Simon Pryce spoke of “a solid pipeline of acquisition opportunities to accelerate our strategy, supported by our strong balance sheet.” And that’s precisely the form of factor I’m considering of.
The corporate generated £349m in operational money circulation within the 2024-25 yr, up 16%. And the yr ended with web debt of solely £364m. I see that as very wholesome liquidity, with a web debt to adjusted EBITDA ratio of just one.1.
What comes subsequent
Markets are nonetheless difficult, and all the worldwide tariff uncertainty doesn’t assist. However RS has a medium-term goal of “growing revenues at twice the market” common, with “over 80% money conversion and over 20% return on capital employed“.
With brokers forecasting such robust earnings progress, we may see a price-to-earnings (P/E) ratio of round 12 by 2028. That ties in with a usually low P/E valuation for the general mid-cap index in the intervening time.
And it suggests to me that we may very well be in for a spell of outperformance from the FTSE 250 within the subsequent few years — it’s slipped again towards the FTSE 100 prior to now 5 years.
What’s the danger?
The largest hazard I see is the potential disruption to manufacturing provide chains kicked off by the US-led international commerce wars. With so many corporations altering their sourcing, manufacturing and distribution channels, we may very well be taking a look at a really totally different commerce state of affairs over the subsequent few years.
Financial adjustments have come thick and quick since these FY numbers delivered in Could. First-half outcomes for the present yr are due on 6 November, and so they may show pivotal. I’m definitely very eager to see them.
General, what I’m seeing here’s a FTSE 250 inventory with tempting potential, popping out of a weak spell in a robust monetary place. And there’s a 4% dividend yield on the playing cards for traders who desire a little bit of revenue. It’s undoubtedly one I feel progress traders ought to contemplate.
