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FTSE 250 broadcaster ITV (LSE: ITV) appears to me like a kind of uncommon revenue performs that additionally carries a compelling restoration story.
Its dividend profile stays reassuringly excessive. And with the shares buying and selling properly beneath what I view as their honest worth, there may very well be sizeable capital positive aspects on provide as properly.
So, how a lot might traders make from the inventory?
Earnings development drivers
Any agency’s dividends and share worth are pushed by development in its earnings. A key threat to ITV is competitors in streaming, which might squeeze its margins over time. Even so, consensus analysts’ forecasts are that its earnings will develop a mean of 11.2% a yr to end-2028.
I believe the corporate’s development story is anchored within the elements of the enterprise that sit past conventional broadcasting. Digital viewing continues to rise via ITVX, bringing larger‑margin promoting and a extra resilient income combine.
In the meantime, the Studios division retains increasing its world footprint with a pipeline of returning codecs and worldwide commissions.
How do latest outcomes look?
ITV’s latest outcomes present clear progress in key areas, in my opinion.
Digital promoting income rose 12% yr on yr in H1 2025 and 15% over the primary 9 months. Studios’ exterior income grew 11% within the first 9 months.
Whole promoting income in H1 was up 2% over the earlier yr and forward of steerage.
In the meantime, the group delivered £45m in everlasting non‑content material value financial savings, serving to offset inflation and fund funding.
The corporate now expects stronger money technology for the complete yr, and a extra resilient earnings base.
Share worth positive aspects potential?
A reduced money move evaluation displays forecast earnings development in future money flows, discounted again to at present. Some analysts’ DCF modelling is extra conservative than mine.
Nevertheless, based mostly on my DCF assumptions — together with a 7.7% low cost price — ITV appears 31% undervalued at its present 81p worth. Subsequently, its honest worth might secretly be near £1.17 a share.
That is vital, as inventory costs can commerce to their honest worth over the long term.
Dividend revenue potential?
ITV’s present 6.2% dividend yield compares very favourably to the FTSE 250’s 3.5% common. Analysts forecast it should maintain at this degree to end-2028, though yields can go down or up over time.
So, traders contemplating a £5,000 holding in ITV might make £4,280 in dividends after 10 years, rising to £26,965 after 30 years.
That is based mostly on the dividends being reinvested again into the inventory — referred to as ‘dividend compounding’.
By then, the whole worth of the holding (together with the unique £5,000 funding) can be £31,965. And that will pay a yearly dividend revenue of £1,982.
My funding view
ITV appears to be a kind of retro FTSE 250 names the place the market has turn into fixated on the structural decline in linear promoting. It seems to be lacking the progress occurring elsewhere within the enterprise.
I see the agency as a gradual, money‑wealthy operator fairly than a fast development story. This might enable affected person traders to gather revenue whereas ready for sentiment — and worth — to meet up with fundamentals.
I don’t purchase shares below £1, as I don’t need the added worth‑volatility threat at my late stage within the funding cycle. Nevertheless, for much less risk-averse traders, I believe the inventory is properly value contemplating.
