The JD Sports (LSE:JD.) share price has just set a fresh 52-week high, yet I still don’t think the shares look expensive.
That sounds odd, doesn’t it? The shares recently pushed through the mid-90s, having traded as low as around 64p earlier in the year.
Normally, a new high makes me cautious. Here though, it feels more like the market correcting an overly pessimistic view.
But while JD’s no longer priced for disaster, it may still be priced for stagnation.
The balance sheet’s changed
The rally may reflect improving sentiment towards UK retailers. But more importantly, I think it reflects evidence that JD has stabilised its balance sheet.
The sports/athleisure retailer ended H1 2026 with £168m of net cash, nearly £300m better year on year, despite returning £260m to shareholders. As they say, cash is king.
In this case, it means JD can keep investing, support its dividend, and survive a difficult consumer market without panicking.
Management’s also maintained its FY 2027 guidance, expecting adjusted pre-tax profit of £700m-£800m and free cash flow of £460m-£520m. It has also continued buying back shares and raised its interim dividend by 21% to 40p.
After several years of profit warnings, that’s an impressive recovery – and I think it’s just getting started.
Why the shares may still be cheap
I think the market’s still reeling from JD’s past problems, which is understandable. But the numbers are hard to ignore. In 2026, revenue was £4.1bn, 48% higher than in 2022, and operating profit rose 20% over the same period.
That’s given it confidence, with guidance for at least £1.4bn of free cash flow between now and 2028, with no conventional (non-lease) debt.
Even if it delivers just the middle of guidance, the shares would still look undervalued. If trading improves, the capital growth could be substantial.
Brokers can’t agree though, with Berenberg eyeing a 150p target while Goldman Sachs offers a more cautious 105p.
The gap highlights the lingering caution after years of stubborn inflation and disappointing results.
Not in the clear yet
The turnaround, so far, looks good. But it’s early days, and the risks haven’t disappeared. Sales are still under pressure, particularly in North America, where like-for-like sales fell 6.8% in the second quarter. Heavy discounts from competitors, weak discretionary spending and the North American business remain the biggest threats.
Another guidance cut would undermine the recovery story quickly. It’s understandable then, that investors might prefer to buy weakness rather than chase the breakout.
But it would be a mistake to ignore the improvement.
What I’m watching next
A 52-week high feels good, but let’s not forget the stock’s still down 56% over five years.
Before popping the Champagne corks, stabilising like-for-like sales would be nice to see, along with less discounting, progress in North America and delivery of the free-cash-flow guidance.
If, like me, you feel optimistic it can deliver, then JD Sports’ current price offers value that’s worth considering. I’d say it’s moved into moderate risk/reward territory, with low expectations keeping the price subdued.
With US politics shifting towards a potentially more favourable tariff environment, I expect the next results will be even more promising. Sure, it’s been a long wait, but I’m starting to see light at the end of the tunnel.
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Mark Hartley owns shares in JD Sports.
