Is this one of the best FTSE 100 value stocks right now?
Even near record highs, the FTSE 100âs still home to several value stocks. And one company in particular seems to be near the top of the Buy list for multiple institutional investors.
In fact, if these forecasts are correct, then a £1,000 investment today could be worth up to £1,629 by this time next year â a 63% return in just 12 months!
A massive discount?
The value stock in question is Croda International (LSE:CRDA), with analysts at Barclays, UBS, JP Morgan, and Berenberg Bank all estimating the stock to be trading firmly below its intrinsic value.
The speciality chemicals group has had a rough ride of late, falling by over 70% since the start of 2022.
Why? Because Croda went from earning massive profits from specialised components needed for Pfizerâs and Modernaâs Covid-19 vaccines to suffering through a sustained industry-wide destocking cycle as the pandemic entered the rear-view mirror.
While the earnings collapse of £649m in 2022 to £62m in 2025 is real, the consensus among institutional analysts today is that investors have oversold.
Crodaâs already seeing a resurgence in growth across its Consumer Care and Life Sciences segments, with crop protection, in particular, seeing a 14% jump in revenues last year.
At the same time, managementâs targeting £100m in annualised savings by 2028, with £28m already delivered in 2025, paving the way for a small but noticeable bump in profit margins. But more encouragingly, thanks to a continued decline in capital expenditures, free cash flow also surged in the second half.
With more improvement projected throughout 2026, underlying operating margins are on track to expand to 18.4% this year from 17.4% in 2025, before climbing even higher to 19.5% in 2027.
Yet, despite this upward trajectory in the business, the stock price continues to fall into value stock territory.
What to watch
Seeing shares tumble while operations improve is exactly what value investors hunt for. But Croda still has some challenges to overcome.
A big source of concern right now is supply chain disruption. Speciality chemicals typically have very complex supply chains, where production, processing and selling often happen on different continents. As such, Crodaâs significantly exposed to trade disruptions like US tariffs.
Something else to keep an eye on is the groupâs Consumer Care segment. Competition, particularly from China and India, has picked up drastically in recent years, undercutting Crodaâs products and harming its margin recovery progress.
Whatâs the verdict?
When taking a step back, Croda shares look like a classic recovery play. Compared to the long-term earnings power of this business, the shares are trading at an unusually cheap valuation. But thatâs only true if the business can continue rebuilding its profit margins and outmanoeuvre its rivals â something that isnât guaranteed.
Nevertheless, at todayâs valuation, the risk-to-reward ratio does look quite enticing. Thatâs why I think this value stock deserves a deeper dive. And itâs not the only potential buying opportunity on my radar this week.
The post Is this one of the best FTSE 100 value stocks right now? appeared first on The Motley Fool UK.
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Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International Plc. 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.
