Moneysupermarket.com PLC

Moneysupermarket.com Group PLC (LON: MONY) is an FTSE 250 listed Company, which provides price comparison services through three brands - TravelSupermarket, MoneySuperMarket, and MoneySavingExpert.

Investment Highlights – BUY at GBX 271.30

• Decision Tech division sustained its double-digit growth in both B2C and B2B domain.
• MONY benefits from solid brand positioning and high levels of cash conversion, which ensures its decent position to weather the period of economic uncertainty and deliver future growth.
• As per the analyst consensus given on the investor website of the Company, market expectations for FY21’s adjusted EBITDA is in a range of £97.1 million to £118.5 million.
• Since FY16, net margin and EBITDA margin have remained above 20.1% and 31.3%, respectively, which are substantially higher than the industry median.
• From a technical standpoint, 20-period SMA (GBX 268.7) is sustaining below the current market price, which is supporting the bullish trend.

Key Risks

• The travel revenue remained negligible during Q1 FY21 due to travel restrictions.
• MONY may experience operational glitches, which may result in the transfer of incomplete or incorrect data to or from partners, which could negatively impact brands reputation.

Recent News

10 May 2021: MONY has integrated NatWest into its digital remortgage platform to expand its offerings and website experience.

Trading Statement for the quarter ended 31 March 2021 (as on 20 April 2021)

 (Source: Company Website)

• Given the ongoing market disruption, Q1 FY21 performance was in line with expectations since the insurance performance remained consistent throughout the quarter.
• However, within Money service, search demand was initially impacted with strict lending criteria, albeit it witnessed a gradual recovery in demand and conversion.
• Within Home services, Broadband continued to perform well; however, energy switching was considerably lower against Q1 FY20.
• Adjacently, Decision Tech sustained its double-digit growth in both B2C and B2B.

One Year Share Price Chart

 (Source: Refinitiv, Thomson Reuters)

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Conclusion

FY21 performance is expected to align with market expectations since the factor influencing the performance remained unchanged during Q1 FY21. MONY continued to assist millions of households amid lockdown through the energy price cap rise. It is focusing on attracting more customers by enhancing data management. Moreover, the Company has seen little improvement in banking services with promotional offers; however, the travel market remained severely disrupted. The stock made a 52-week high and low of GBX 354.00 and GBX 233.79, respectively.

Based on the resilient business performance, unchanged market factors, full-year outlook, with support from the valuation as done using the above method, we have given a “BUY” recommendation on Moneysupermarket.com Group PLC at the current price of GBX 271.30 (as on 11 May 2021, at 1:30 PM GMT), with lower double-digit upside potential based 22.82x Price/NTM Earnings (approx.) on FY21E earnings per share (approx.).

*All forecasted figures and Industry Information have been taken from Refinitiv, Thomson Reuters.

*Dividend Yield may vary as per the stock price movement.

Disclaimer

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