I'm calling Universal Store Holdings Ltd (ASX: UNI) an ASX value stock that looks too good to miss because of the reduction of the share price, the growth of earnings and the cheap price/earnings (P/E) ratio.
Universal Store is a fashion-focused ASX retail share that sells clothes focused on younger shoppers. Its main two brands are Universal Store and Perfect Stranger, though it also sells through CTC (which includes Thrills and Worship).
Unfortunately for shareholders, the Universal Store share price has already 14% in March and it seems likely that the business could face more pain this week. I think it'd be an even more attractive buy.
Image source: Getty Images
Continuing impressive growth
The FY26 half-year result was a strong reflection of its ability to deliver growth even in challenging trading conditions.
In the first six months of the 2026 financial year, group sales grew 14.2% to $209.6 million, with Universal Store sales growth of 11.9% to $174.8 million and Perfect Stranger growth of 41.5% to $17.8 million. Even CTC delivered sales growth, with a rise of 4.8% to $23.2 million.
Profitability is increasing too. Increasing scale helped the gross profit margin rise 150 basis points (1.50%) to 62.1%. Combined with cost discipline, the underlying operating profit (EBIT) grew 23.2% to $43.6 million and underlying net profit after tax (NPAT) rose 22% to $28.3 million.
I'm particularly excited by the potential of the Perfect Stranger brand which is rapidly growing. I expect it to make a greater contribution to the ASX value stock as time goes on. Three new stores were opened during the period, giving the brand 22 stores at the end of HY26.
The business is expecting to grow its overall store count by at least 13 in FY26 and management are pursuing additional store opportunities while being prudent.
In the first several weeks of the second half of FY26, the business reported direct-to-customer sales growth of 13.5%, which included Perfect Stranger Sales growth of 39%.
This isn't just one year of strength, but it has delivered year after year performance since the onset of COVID-19.
It's growing rapidly, but it isn't priced that highly.
The ASX value stock's cheap valuation
The experts at UBS project that the business could make net profit of $43 million in FY26, which translates into earnings per share (EPS) of 55 cents.
At the current Universal Store share price, that means it's trading at 15x FY26's estimated earnings.
In terms of next year's valuation, it's forecast by UBS to see net profit grow by 14% to $49 million, putting it at 13x FY27's estimated earnings. With the potential profit growth figure similar to the P/E ratio number, we're talking about a PEG ratio of close to 1, which is very attractive in my book.
Over the next three years, I think this ASX value stock has a great shot at outperforming the S&P/ASX 200 Index (ASX: XJO), including the dividends.
