After declining 17% so far this year JD Sports Fashion (LSE:JD) shares are approaching their lowest level in the last decade. the FTSE 100 index The athletic apparel retailer has been dealing with the issues for some time, but the decline in recent months is starting to look exaggerated to me. Could it be the biggest trade in the index?

Last fall

I notice two catalysts for a move to the downside this year. One was notable analyst price cuts, the other was dovish guidance from management. Back in February, the research team at Deutsche Bank Cuts price target for JD Sports from 95p to 85p. They cited concerns that JD may be out of sync with changing fashion trends, especially as consumers move away from some of its core styles.

Meanwhile, fourth-quarter results released in January showed UK and European sales falling by 5.3% and 3.4%, respectively. The administration warned “Silent market growth” In the future, profits are expected to decline year-on-year. It’s true that strained consumer finances cause some to spend less. Moreover, the business is also highly exposed to big brands such as NikeAnd when these suppliers have their own problems (which Nike does), JD feels it too. Its stock price has fallen 11% in the past year.

Positive outlook

Despite all the hype, the core business is still growing. North American revenues in the fourth quarter increased 5.3% compared to the same period last year. Asia Pacific grew by 9.6%! JD maintains a strong global footprint with thousands of stores around the world. This means it is diverse, and now helps even when some areas are performing poorly.

It is also well positioned to capitalize on the growing trend of sports retail. Add to this mix the increase in running as a hobby, with recent results being observed “Positive momentum in running” sales.

More importantly, when it comes to calling a stock a bargain, I have to point to the valuation. It’s been significantly compressed, with a price-to-earnings ratio of just 5.69. I use 10 as a fair benchmark, so anything less than that I would classify as undervalued. A low ratio indicates that investors are taking into account too much bad news for next year already. If things aren’t as bleak as some expect, the stock now looks like a bargain given how high it is.

Bottom line

If JD can stabilize profit margins, adapt to changing trends (such as the shift toward operating brands), and continue to see strong growth in North America, there is a strong case for a higher stock price. There is also an argument that short-term investors have been overly pessimistic, focusing on quarterly fluctuations rather than long-term growth potential. Of course, risks related to underperformance in the UK and Europe remain, but overall, I think the stock is the biggest bargain in the FTSE 100 at the moment and I would consider buying it myself.