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Both ITV (LSE:ITV) and Pets at Home (LSE:PETS) are FTSE 250 stocks that have been struggling for form.
ITV’s share price is down 35% since February 2022, and has ultimately gone nowhere for decades. Meanwhile, Pets at Home has slumped 50% in five years.
Which one do I personally think has the best turnaround potential? Let’s find out.
ITV
ITV survived the Sky satellite threat in the 1990s largely because it remained the default free option for millions who couldn’t afford the pricey subscription packages. And it has also survived disruption threats from the internet so far.
But this challenge is different. The internet is universal and low-cost. It fragments attention across endless platforms (YouTube, Netflix, TikTok, Facebook, Instagram, X, Snapchat, Spotify, Roblox, etc).
Put simply, ad dollars follow eyeballs, and eyeballs are no longer glued to the TV set every night.
Naturally, the firm is adapting, and its ITVX platform saw total streaming hours rise 15% in H1. But every time a viewer chooses to watch Coronation Street on ITVX catch-up instead of ITV1 at 8pm, that’s one less pair of eyeballs for the traditional broadcast ads.
Digital ad revenues grow, but overall growth remains low.
That said, the reality is more nuanced because the company also has ITV Studios. This valuable arm makes content for global streamers, such as Dating After Dark for Netflix, and Love Island USA for Peacock.
In H1, Studios’ revenue grew 3% to £893m, with an adjusted EBITA margin of 12%. This division is expected to grow at around 5% per year, offsetting declines in the linear TV business.
However, ITV’s low growth is reflected in a forward-looking price-to-earnings ratio of just 9. There’s an attractive 6.3% dividend yield on offer, but the payout isn’t forecast to increase much.
How I see it, ITV has to paddle hard to ultimately stay where it is. I think it’s doing a good job at this. But barring some sort of takeover or spin-off of ITV Studios, I don’t expect a meaningful turnaround in the share price long term.
Pets at Home
Pet at Home has also been struggling for growth, with weak consumer confidence hitting the pet retail market hard. The firm now expects FY26 pre-tax profit to be £90m-£100m rather than £110m-£120m.
If inflation keeps spiking, things could get even worse. There’s also lots of competition online and from supermarkets.
Yet there will be a new CEO coming in, and I think there are ingredients to work with. The firm has a growing Easy Repeat subscription business, as well as the loyalty programme (Pets Club), and building out the offerings here should help keep pet owners loyal.
Pets at Home also has over 440 veterinary practices across the UK. And this higher-margin division is set to deliver high-single-digit sales growth in FY26, while opening 10 new practices.
Add grooming services and pet insurance to the vet practices and food supplies, and there’s a powerful Pets at Home ecosystem that could be unlocked here. With the right execution, I feel there’s a lot of turnaround potential here, especially if inflation settles down.
Finally, the balance sheet is in decent shape, while the stock isn’t expensive at 12 times forward earnings. I think this FTSE 250 share is worth keeping an eye on.
