What ITM Power Holders Got Right

If ITM Power sat on your watchlist instead of in your portfolio, the recent move may feel like a missed shot. Holding ITM Power from the start of the year would have returned 46.6%, including dividends. That gain landed while analysts were split between government backed growth in green hydrogen and worries about financing, policy reversals, and factory under absorption. If both stories were on record, which business assumption deserved more weight before the outcome was visible?

ITM Power has already moved. See which of 8 high quality undervalued stocks still trade below our estimates.

The Two Stories Investors Had To Weigh On ITM Power

The shares cost £0.62 at the start of the period, and anyone looking at ITM Power had to choose between two very different stories.

On the optimistic side, the bullish narrative argued that heavy government spending on green hydrogen and automated factories would feed a rapid revenue ramp. That view pointed to a Fair Value of £0.94, the price implied if assumptions such as 54.6% yearly revenue growth and a shift toward a 5.8% profit margin played out.

The bearish script still allowed for fast sales growth but put more weight on financing and policy risks. Under that lens, tighter capital markets and possible subsidy pullbacks could limit projects, so the implied Fair Value sat lower at £0.40, alongside an assumed future P/E of 57.7x on improved earnings.

What The Results Changed For ITM Power

The clearest evidence came from ITM Power’s interim numbers. Revenue was £18.026m in H1 2026 versus £15.534m in H1 2025, while the loss narrowed from £28.86m to £14.16m and net margin improved from a loss of 185.8% to a loss of 78.6%. Profitability remained negative, so the optimistic case for a clean break into positive earnings stayed unproven and the results cut both ways.

The key assumption here was not just growth but also improving economics. For another stock, track revenue alongside net margin and absolute profit in each filing, and then ask whether the business is only getting bigger or also becoming less loss making over time.

What ITM Power’s Price Already Builds In

ITM Power now trades at £0.94 from the start-of-year level of £0.62, so this Narrative’s Fair Value sits below the current price.

The argument leans on fixed costs and factory load rather than demand headlines. For today’s valuation to hold, a buyer would need to believe that large scale Sheffield and CHRONOS capacity converts into consistently profitable, cash generative projects.

"Despite policy support for large scale green hydrogen build out and a growing project pipeline for ITM Power, the planned £120m CHRONOS manufacturing line with bespoke automation risks locking in a high fixed cost base well ahead of proven demand for that capacity. This could weigh on net margins and extend the period of EBITDA losses if order conversion slows."

One Narrative disagrees with today's price. → See where this Narrative says ITM Power should trade

Go Straight To The Source

You may be late to this rally, but that does not have to mean arriving late to every opportunity. Start with companies whose prices leave room for a different view of their future. Here are three trading below our estimates.

• Company 1 - 24% below our estimate - uses a tech enabled platform and AI tools to help senior lawyers transition.
• Company 2 - 19% below our estimate - expands distribution of everyday sports supplements as automated capacity eases production constraints.
• Company 3 - 28% below our estimate - converts a unified tech stack and rising inflows into higher platform asset share.

That is three of the list. See the full list of 9 financially solid companies →

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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