According to the consensus of analysts covering London Stock Exchange Group (LSE:LSEG) is the most undervalued company on the market FTSE 100 index.

Now analysts' expectations may be misleading. Sometimes there aren't many people covering a stock, and the consensus of two analysts isn't a great consensus. And some of them are simply not very good at their jobs. I recently edited an investment paper by an analyst at a major investment bank, and it was a terrible job in every way.

There is also an element of time lag. Sometimes, analysts do not have enough time to update their coverage. The company may report a bad quarter and the stock price declines, but analyst expectations remain the same.

This does not seem to apply here – although I cannot guarantee the quality of all analysts. The stock is covered by 17 of them, and with a market capitalization of ₹44.8b, it is probably the biggest company covered by most analysts.

How is it undervalued?

Well, according to their average forecast, the stock is undervalued by 43%. This indicates that the market is largely ignoring the potential of this company.

On a statutory basis, the stock trades at about 43 times forward earnings. Although this number will decrease significantly to 27.2 times by 2027, the revised numbers are much more revealing.

Current forecasts are for earnings per share of 399p for next year and 442p for 2026. This gives us a price-to-earnings (P/E) ratio of 21.5 times for 2025 and 19.3 times for 2026. Of course, these numbers mean nothing without context. Why would an investor pay 21.5 times his earnings for a London Stock Exchange group, but might think twice before paying 16 times more for a supermarket chain?

It's all about the quality of the business and the potential for sustainable profit growth. Quality is often indicated by brand strength, market position and margins.

In the first half of the year, LSE Group reported an adjusted EBITDA margin of 49.5% – up 100 basis points over a year. In other words, every £10 of sales equals £4.95 of EBITDA.

Most other companies, especially in the FTSE 100 which is dominated by mature companies such as banks and miners, cannot compete with this.

All things considered

Despite everything I said above, this is not a flawless company – anything else. Investors considering LSE Group should note that the value of the annual subscription is not particularly strong, especially as you like some products Icon Being retired.

Recall that data and analytics is now LSEG's largest business, responsible for almost half of the group's total income. This is also where investors are eagerly awaiting the fruits of the tie-up with the tech giant Microsoft. Losing market share to Bloomberg or FactSet wouldn't be a real concern.

However, there are several reasons why I think investors should consider this stock. I've noticed a few of them, including margins and valuation. But the above extract from interim results highlights a diversified business with significant growth across multiple divisions.