Small but mighty: 2 FTSE 250 growth shares beating expectations
While the FTSE 250 is up only 5% this year, several of its constituents have been soaring. The top three gainers so far in 2025 include Chemring Group, Rank Group and Close Brothers – all up by over 60%.
But as tempting as those price gains are, I’ve learnt from experience that real long-term success comes from consistent revenue and earnings growth.
And, since the share price usually follows, catching early earnings growth can pay off. With that in mind, here are two FTSE 250 stocks showing exceptional fundamental growth.
Lion Finance Group
Formerly the Bank of Georgia, Lion Finance Group (LSE: BGEO) has been an absolute growth machine in recent years. So much so, it can hardly be considered a small stock today. Since 2020, revenue has increased from £508m to £1.63bn and earnings from £1.55 per share to a whopping £11.61.
It now boasts a net margin of 30.9% and a stellar return on equity (ROE) of 28.8%, indicating strong efficiency at generating profits from shareholder funds.
And still, the valuation looks appealing. The shares trade on a price-to-earnings (P/E) ratio of just 5.6, albeit with a slightly high price-to-book (P/B) ratio of 1.47. It also pays a decent dividend yield of 3.3%, with three straight years of dividend growth.
However, since the bank is heavily tied to the Georgian economy, it’s exposed to local political or economic shocks. With domestic factions torn between Russia and the EU, this is a key concern. Plus, it faces foreign exchange risks, with earnings vulnerable to currency swings against the pound.
Still, the exceptional earnings and stable dividend make it a stock that deserves a closer look.
Trainline
Trainline (LSE: TRN) is a leading platform for buying train tickets in the UK and across Europe. After an understandably tough period during the pandemic, the business has bounced back spectacularly. EPS has risen from a small loss of 1p in 2021 to a positive 19p in 2024, while revenue has skyrocketed from £67m in 2020 to £442m this year.
The company has beaten earnings estimates three years in a row, underlining the strength of the recovery. Trainline’s net margin sits at 13.2%, with a solid ROE of 19.86%.
Despite this explosive growth, the stock still looks reasonably priced, trading on a forward P/E of 14 and a very low PEG ratio of just 0.28 — a classic indicator of undervalued growth. Of the 12 analysts covering the stock, the average price target sits at 415p, implying a 48% potential rise from current levels.
Risk-wise, it’s a consumer-facing platform exposed to economic slowdowns. Discretionary travel is often among the first things cut from household budgets. Regulations also pose a risk, particularly any impact from changes to rail franchising and fare structures.
Looking below the bonnet
The FTSE 250 is packed with overlooked growth opportunities like these. Lion Finance Group and Trainline have both posted exceptional double-digit earnings growth, with valuations suggesting there could be more to come.
Yes, both carry risks tied to their specific industries and markets, so diversification remains key. But for investors seeking the next wave of growth beyond the FTSE 100, I think these two shares are worth considering.
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Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
