There are plenty of great value opportunities on the FTSE 100 today but one UK share really jumps out: energy giant Centrica (LSE: CNA).

The British Gas owner has baffled me for some time now. Basically, it’s incredibly cheap, with a trailing price-to-earnings (P/E) ratio of just 3.6. That’s a fraction of the FTSE 100 average of 15.4 times. It’s pretty much the lowest on the index.

Centrica isn’t just cheap measured by its P/E. Its price-to-sales ratio stands at just 0.2. That means investors are paying 20p for each £1 of sales Centrica makes.

Why is it so cheap?

The shares have looked dirt cheap for years. Which is odd for a company that was accused of profiteering from the energy crisis after posting record profits of £3.3bn in 2022. They fell 17% to £2.8bn in 2023, but the mud stuck. So what’s going on?

Centrica supplies gas and electricity to more than 10m residential and business customers in the UK and Ireland, under the British Gas brand, and offers add-on services, such as boiler cover. It also has an energy marketing and trading business, and an upstream oil and gas exploration division.

The Centrica share price went on a blistering run during the energy shock, and has more than doubled in the last three years. But it’s fallen 23.27% in the last year as energy prices retreat. FTSE 100 oil giants BP and Shell have followed a similar trajectory.

First-half 2024 results, published on 25 July, showed adjusted operating profits exactly halving from £2.08bn to £1.04bn, due to “normalised market conditions”.

With the board stating that profits were “heavily weighted” to the first half, there’s not a huge amount to look forward to over the next six months. That’s not the end of the world though, I invest with a minimum five-year view.

FTSE 100 bargain, but with problems

All this explains the share price slump and low P/E. Forecast P/Es are usually lower but Centrica’s is higher at 8.47. Analysts expect profits to fall in 2025. So maybe Centrica isn’t quite the bargain I hoped.

Before the energy shock, British Gas was losing customers to rivals – 1.3m in 2017. That stopped when dozens of smaller suppliers went bust but could pick up now that switching is possible again.

Centrica has to invest heavily in the switch to net zero, pouring money into solar, battery storage and energy efficiency services. Time will tell whether these prove more profitable than fossil fuels. Profit margins were a healthy 23.8% last year, but are forecast to fall to just 6.8%. Happily, it’s still sitting on £3.2bn in adjusted net cash.

Dividends are picking up after being axed in the pandemic, as this chart shows.

Chart by TradingView

The trailing yield is a modest 3.3% but that’s forecast to climb to 3.9%, with strong cover. Centrica is running a £200m share buyback programme, to be completed next February.

The 13 brokers offering one-year price views have set a median target of 170.85p. If they’re right, that’s up 42.1% from today’s 120.15p. Tragic events in the Middle East could turbocharge that. Centrica is a mixed bag with plenty of long-term promise. A bargain? maybe. However, I’ve made my energy market move by loading up on BP shares lately, and I’ll stick with them.