Over the past 12 months, 39 FTSE 100 stocks have fallen in value and 61 have gone up. Overall, the index has increased by approximately 10%. This is comfortably above the five-year average of 6.2%.

But it hasn’t been a good year for Frasers (LSE:FRAS).

At the beginning of 2024, the sports retailer’s shares were changing hands for 910p. At the time of writing (13 December), the company’s share price is 620p. That’s a fall of 32% in just under 12 months.

A lot of the damage occurred on 5 December, when the company announced that it now expects its adjusted profit before tax for the year ending 27 April 2025 (FY25) to be between £550m and £600m. That was down from an earlier forecast of £575m-£625m.

Investors took fright, wiping 10.7% off the value of the company. Frasers blamed “weaker consumer confidence” following the budget and warned that it faced additional “incremental costs” of £50m in FY26, as a result of the Chancellor’s plans.

However, despite this poor run, it’s been the twelfth-best performer on the FTSE 100 over the past five years.

Pros and cons

But the shares now look cheap to me.

Even at the lower end of expectations for FY25, assuming a 25% corporation tax rate, the company’s earnings per share would be 91.6p. This implies a forward price-to-earnings ratio of only 6.9.

If the company was able to reach the top end of its forecast, the multiple would drop to 6.

In either scenario, I think this is a bit of a bargain. According to Eqvista, the average for clothing and footwear retailers is 17.8.

However, there are some risks.

We’ve already seen that the company’s share price can be volatile. Some of this can be explained by the large shareholding (73.3%) that Mike Ashley, the group’s founder, still retains. This means there are relatively few shares available for other investors. A large trade can therefore have a disproportionate effect on the share price.

I also wonder whether the company’s directors get easily distracted. With its many interests in other listed businesses, Frasers is akin to an investment holding company. Whether it intends to launch takeover bids for any of them is unclear. But the speculation certainly makes for interesting reading.

Finally, I believe the Christmas period is key. Frasers published its half-year report on 5 December, so it’s likely that the company will have a good idea as to how festive trading is going, compared to previous years. This is likely to have influenced its profits warning, which gives me cause for concern.

Final thoughts

But despite these worries, I do believe the shares offer good value. And the company has a proven track record of growth having increased its revenue by £1.4bn (40%) during its past five financial years.

However, I don’t want to take a position at the moment.

That’s because I own shares in JD Sports Fashion, another FTSE 100 sports retailer. The two companies are too similar, meaning I’d be heavily exposed to one sector, which is never a good idea.

And to illustrate how closely aligned they are, the JD Sports share price — since December 2023 — has been the worst performer on the FTSE 100 (Frasers is the third worst).

I’m therefore going to sit this one out.