FTSE 250 cheap shares: what 'cheap' means, and what it can hide
A share is not cheap just because its price is low. 'Cheap' means the price looks low against something else, such as earnings, assets or dividends, and a low reading on any of them can be a warning as easily as a bargain.
Short answer: always ask what the price is low against. The price of one share, taken alone, tells you almost nothing.
Is a low share price the same as a cheap share?
No. Market capitalisation is the share price multiplied by the number of shares in issue. Two companies can have the same share price and be completely different sizes, because one has issued far more shares than the other. A low price can simply mean a company has a lot of shares in issue, and a high price can mean it has few. Neither tells you anything about value. The market capitalisation worked example goes through the sum step by step.
So "is the price low?" is the wrong question. The useful one is "low compared with what?"
What people usually mean by 'cheap'
When someone calls a share cheap, they usually mean the price looks small next to something the company earns, owns or pays out. There is no official definition, and no one certifies a share as cheap.
This matters because "cheap" sounds like a fact. It is really an opinion built on a comparison, and the person making it chooses the comparison. With the right yardstick, almost any share can be made to look cheap, or expensive.
The common yardsticks, in plain English
Three comparisons come up again and again. They are described here in words only. The actual figures belong to each company's own reports.
- Earnings. The price set against the profit the company makes for each share (earnings per share). On this measure a share looks cheap when you pay little for each pound of profit. The catch: profit can include one-off items, and it can fall next year.
- Assets. The price set against net assets, meaning what the company owns minus what it owes. A share looks cheap when the price is low next to that figure. The catch: the value of assets in the accounts is not always what they would fetch if sold.
- Dividends. The cash paid out per share, set against the price. A share looks cheap when the payout looks large next to what you pay. The catch: a board can cut a dividend. How to read FTSE 250 dividend yields covers this yardstick in more detail.
One reading on any of these is where the work starts. It does not settle anything.
Why a low reading can be a warning rather than a bargain
A low reading on any yardstick can mean the market expects trouble.
- If the price looks small against earnings, investors may expect those earnings to fall.
- If it looks small against assets, they may doubt the assets are worth what the accounts say.
- If the dividend looks large against the price, the price may have fallen because people expect the payout to be cut.
In each case the "cheap" number is a sign that something has happened, and the cause sits somewhere else. A low reading asks a question: why is it low? The ratio alone cannot tell you whether the market has missed something or spotted something.
This is the weakness of "cheap shares" lists. They rank companies by one number and leave out the reason behind it.
Why the FTSE 250 is a different place to look from the FTSE 100
FTSE Russell's ground rules define the FTSE 250 as the next 250 qualifying UK companies ranked by full market capitalisation, outside the FTSE 100. The index is reviewed quarterly, in March, June, September and December, so its members change during the year. The guide to what the FTSE 250 is covers how it works.
The review rules include buffers, so a company's rank and its index membership do not always match exactly. At a review, a company outside the FTSE 250 is normally added if it has risen to 325th or above, and a member is removed if it has fallen to 376th or below. Companies dropping out of the FTSE 100 normally move into the FTSE 250, and companies promoted to the FTSE 100 leave it.
This has two consequences for anyone reading about "cheap" FTSE 250 shares:
- A list compiled a few months ago may include companies that have since left the index, or miss ones that have joined.
- Mid-sized companies are a different mix of businesses from the very largest ones. A reading that looks ordinary in one group can look unusual in the other, so comparing across the two indices needs care.
Check membership against the official source. The FTSE 250 list guide explains where it is published and why copies go stale.
Where to read the underlying figures yourself
Go to the company. Listed companies report earnings per share, net assets and dividends per share in their annual reports and results announcements, and most publish these on the investor relations section of their website. That is a better place to read them than a third-party table, which may be out of date or calculated differently.
When you read them:
- Read past the headline number. The notes explain what is inside the profit figure, how assets are valued and what the board says about the dividend. That context is exactly what a single ratio leaves out.
- Check the period and the date. Results describe a past period. A ratio built on old results can be badly out of step with the company today.
- Compare like with like. Check whether two sources use the same profit figure (for example, reported or adjusted) before comparing their ratios.
How company news fits in, and what tone does not tell you
News can explain why a reading looks the way it does: a profit warning, a disposal, a change of chief executive, a dividend decision.
MarketFrame reads the UK business news on each FTSE 100 company every morning and scores the tone of that coverage from -10 (clearly bad news for the company) to +10 (clearly good). It is free to read, with an archive from 30 September 2026. A tone score describes how the coverage reads. It is not a share-price forecast. A negative score does not make a share cheap, and a positive one does not make it expensive.
MarketFrame's company pages cover the FTSE 100. They do not cover FTSE 250 companies. They are still a working example of how to read news tone alongside a company's own figures: the company and sector histories show how a company's coverage changed day by day and which stories moved it, and the daily FTSE news hub shows the context behind each morning's headlines.
What this page does not do
This page names no shares, gives no list, shows no prices and makes no forecasts. It is general information and not advice. Nothing here suggests buying, selling or holding any share.
What it gives you is a habit: when you see "cheap" next to a share, ask what it is cheap against, and why.
Questions people ask
What does 'cheap' mean when people talk about shares?
It usually means the share price looks low against what the company earns, owns or pays out in dividends. There is no official definition, and whether a share gets called cheap depends on which yardstick someone picks.
Is a share with a low price per share cheap?
Not on that basis alone. The price of one share tells you nothing about how many shares exist. Market capitalisation, the share price multiplied by the number of shares in issue, is the measure of size, and a low price can belong to a large company or a small one.
Why would a FTSE 250 share look cheap on paper?
A low reading can come from a one-off boost to profit, from assets the accounts value more highly than a buyer would, or from a dividend the market expects to be cut. The reading tells you there is a question to ask. It does not answer it.
Where can I find the official list of FTSE 250 companies?
Use FTSE Russell's own published constituent material rather than a copy, because the index is reviewed every quarter and copies go out of date. The [FTSE 250 list guide](/guides/ftse-250-list-of-companies-where-to-find-it-and-why-it-goes-stale) explains where to look.
Does a negative news tone mean a share is cheap?
No. A tone score describes how the news coverage reads. It is not a share-price forecast and says nothing about valuation, so a negative score cannot tell you whether a share is cheap.
Sources
Follow by email
A short, free morning email on how the news treated the FTSE 100: the tone, the stories behind it, and when coverage starts to turn. Launching soon; one click to unsubscribe.