ASX Stocks That May Be Undervalued In February 2026

As the Australian stock market opens slightly lower today, influenced by ongoing challenges in the U.S. tech sector and cautious global sentiment, investors are keenly observing potential opportunities amidst this volatility. In such an environment, identifying undervalued stocks can be crucial for those looking to capitalize on market inefficiencies and long-term growth potential.

Click here to see the full list of 43 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

Let’s review some notable picks from our screened stocks.

Overview: Australian Finance Group Limited, with a market cap of A$548.96 million, operates in Australia as a mortgage broking business through its subsidiaries.

Operations: The company’s revenue is primarily derived from its Distribution segment at A$934.50 million and Manufacturing segment at A$330.30 million.

Estimated Discount To Fair Value: 12.6%

Australian Finance Group is trading at A$2.02, below its estimated future cash flow value of A$2.31, suggesting it may be undervalued based on cash flows. The company’s earnings grew by 20.7% last year and are forecast to grow 18.06% annually, outpacing the Australian market average of 12.1%. However, its debt coverage by operating cash flow is weak, and its dividend track record is unstable despite a high future return on equity forecast of 22.3%.

• The analysis detailed in our Australian Finance Group growth report hints at robust future financial performance.

• Delve into the full analysis health report here for a deeper understanding of Australian Finance Group.

Overview: Nick Scali Limited, with a market cap of A$2.09 billion, is involved in the sourcing and retailing of household furniture and related accessories across Australia, New Zealand, and the United Kingdom.

Operations: The company’s revenue is primarily derived from the retailing of furniture, amounting to A$495.28 million.

Estimated Discount To Fair Value: 23.1%

Nick Scali is trading at A$24.41, below its estimated future cash flow value of A$31.75, indicating it is undervalued by more than 20%. While earnings are forecast to grow at 15.4% annually, faster than the Australian market’s average, profit margins have declined from 17.2% to 11.6%. The company’s revenue growth of 9% per year surpasses the market average but remains modest overall, and its dividend coverage is weak despite a high return on equity forecast of 32.1%.