Goco Group PLC

Goco Group PLC (LON: GOCO) is a United Kingdom-based holding company. Its earlier name was Gocompare.com Group Plc. The group’s principal activity is providing an insurance price and product comparison Website. The company’s segment includes Insurance and Strategic Initiatives.

Financial Performance for the Year Ended 31^st December 2019

(Source: Preliminary Results, Company Website)

Group revenue for the financial year 2019 was broadly flat at £152.4 million(2018: £152.6 million), as H1 FY2019 saw a continuation of the challenging market conditions in Price Comparison experienced during 2018. The investment in customer acquisition in the AutoSave business has been the main driver of the £17.2 million or 45.9% reduction in operating profit to £20.3 million (2018: £37.5 million). The basic earnings per share decreased by 53.8% to 3 pence in 2019 (2018: 6.5 pence). Final dividend per share of 0.5 pence, represents the full-year dividend per share to 0.9 pence.

Share Price Performance

Daily Chart as at March-06-20, before the market closed (Source: Thomson Reuters)

Goco Group PLC shares were trading at GBX 78 before the market close (at 8:15 AM GMT) on 6th March 2020 and were down by 0.76% versus the previous day closing price. Stock 52 weeks High and Low are GBX 107.60 /GBX 68.30.  The group’s stock is reflecting the higher volatility as against the benchmark index, based on the company’s beta of 1.36.

Technical Indicator
At the current trading level, shares were trading below its long-term crucial support level of 20-day and 50-day Simple moving average price, and prices could fall further from the current trading level. This also shows the bearish technical indicator.

From the price-performance standpoint, its shares have delivered a negative return of approximately 25.18% on a year to date basis and losses of around 17.06% recorded in the past one-month period.

Goco Group PLC V/S FTSE All-Share Index – 6 Months
 
(Source: Thomson Reuters)

In the last six months, GOCO share price has delivered negative 22.35 per cent return as compared to negative 8.72 per cent return of FTSE All-Share index, which shows that the stock has underperformed as compared with the index.

Goco Group PLC V/S Industry V/S Sector – 2 Year
   
(Source: Thomson Reuters)

In the last one year, GOCO share price showed a negative performance of 30.32 per cent. This also reflects that the company is underperforming as compared with the industry and sector performance in two years period.

Valuation Methodology
 

Key Risks
A negative effect on current and future financial performance and reputation could arisefrom an inability to quickly adapt to changes in customer behaviour and expectations or being unable to keep pace with technological changes. GoCompare faces potentially increased brand advertising by rivals or an increase in the paid traffic costs. GOCO may have to increase spending on its technology platform in order to match investments by rivals.

Conclusion
The recent trend shows a declining evolution mainly due to a deterioration in financial performance.Higher customer acquisition costs drive major key risk for the Group. Customers require significant education before signing up, and GOCO does not have significant energy market-focused traffic. A let-down to manage and mitigate cyber-related incidents affecting infrastructure and websites may lead to unavailability of services.

At the current trading level, the stock was trading quite below its short-term crucial support level, a bearish technical indicator which reflects prices could move down from the current trading level.

Based on the valuation and factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current price of GBX 80.60 (as on 6^th March 2020, before the market close at 8:00 AM GMT), with support from few catalysts needs to be evaluated at a later stage.

Kier Group PLC

Kier Group PLC (LON: KIE) is a Bedfordshire, United Kingdom-based leading infrastructure and construction services company in the UK. The operations are differentiated in four operating segments, namely Property, Residential, Construction and Services.

Challenging market conditions impacted the financial performance for the six months ended 31^st December 2019

(Source: Interim Results, Company Website)

For the current period, the revenue from continuing operations, before exceptional items, fell by 9% to £1,866 million,mainly driven by challenging market conditions affecting both Construction and Infrastructure Services, where revenues tumbled 7% and 10%, respectively. While the statutory revenue decreased to £1,819 million in H1 FY20 (H1 FY19: £1,983 million). The headcount for the current period has decreased by 420; the company has shifted its office at Foley Street in London. On 31^st December 2019, the Group’s net debt stood at £242.5 million and was in line with anticipations. For the period, the average month-end net debt was £395 million, a decline of £27 million from FY19. On 31^st December 2019, the order book was broadly flat at £7.9 billion (30 June 2019: £7.9 billion). Further, the company has been appointed to several other frameworks since, 1st January 2020, including the £1.2 billion Islington New Build Construction Framework and the £2 billion Hyde Main Contractor Framework.

Share Price Performance

Daily Chart as at March-06-20, before the market closed (Source: Thomson Reuters)

Kier Group PLC shares were trading at GBX 114.40 before the market close (at 9:47 AM GMT) on 6th March 2020 and were down by 12% versus the previous day closing price. Stock 52 weeks High and Low are GBX 535.18 /GBX 58.40.  The group’s stock is reflecting the inverse volatility as against the benchmark index, based on the company’s beta of negative 0.79.

Bearish Technical Indicator
At the current trading level, shares were trading below its long-term crucial support level of 20-day Simple moving average price, and prices could fall further from the current trading level.

From the price-performance standpoint, its shares have delivered a negative return of approximately 77.15% on a YoY basis and losses of around 25.87% recorded in the past nine-month period.

Key Risks
With respect to its office closures, the reduction in headcount, and the outsourcing of certain functions. The group is substantially exposed to the Brexit related risks as Brexit has the potential to disrupt the group's operations, particularly in relation to materials, people and the supply-chain. Also, the company is facing the impact of Coronavirus (COVID-19).

Conclusion
The second half has started positively with significant orders received. Kier Group anticipates delivering an annual cost savings of minimum a 60 million pounds in the FY2021 and headcount decrease of 1,200 by 30th June 2020 and is reviewing additional cost optimisation opportunities. Its cost reduction programme is projected to deliver benefits of at least £65 million by 30 June 2021. The Group expects to progress the sale of Living and to decrease the capital invested in its non-core businesses. The company’s financial performance declined in the financial year 2019, driven by the challenging market conditions experienced.

Therefore, based on the lacklustre performance of the company on a YoY basis and potential risks that Brexit and COVID-19 was posing to the group, we have given a "Watch" recommendation at the closing price of GBX 130 (as on March 05, 2020), while we look for any upcoming catalysts in the near term.
 
*All forecasted figures and information have been taken from Thomson Reuters.

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.