After Trainline PLC's (LSE:TRN) interim results showed stronger-than-expected trading and EBITDA guidance raised to the top of the range, several analysts put forward the view that the ticketing group's shares are being undervalued.
Shore Capital said Trainline’s equity is “being unfairly discounted” and the group is “well positioned” for digitalisation and European growth.
Stifel said the update was “better than expected” and believes shares offer “decent value” despite PAYG ticketing concerns.
Peel Hunt agreed that new guidance and today's £150 million buyback do not justify the current low rating of around six times 2026 EBITDA and a 16% free cash flow yield.
Stifel suggested Trainline shares "offer decent value at current levels", putting the valuation at 14 times earnings per share.
"We think the current low valuation is mostly due to the perceived threat of pay-as-you-go (PAYG) ticketing".
Shore Cap's view was a similar one, putting the discount doe to "wider UK government noise". On its forecasts the shares trade for seven times on an EV/EBITDA basis or 14 times EPS, despite improving margins and a low double-digit FCF yield.
The Liverpool-based broker said Trainline "is well positioned, in our view, to take advantage of the growing digitalisation of the UK rail network, explore European TAM opportunities in line with planned increased carrier competition, whilst also leveraging the proprietary technology platform for further customer engagement and B2B potential".