Moneysupermarket (MONY)

229.8p

Gain to date: 32.1%

We said Moneysupermarket (MONY) shares were just too cheap when flagging their appeal in early May 2022 and after a very strong set of first half numbers (21 July) it appears the market agrees with us.

We also pointed out that price comparison sites could prove popular with households looking to save money as the cost of living crisis bites.

WHAT’S HAPPENED SINCE WE SAID TO BUY

In late June it was revealed chief financial officer Scilla Grimble was jumping ship to Deliveroo (ROO), although she will stick around until a successor is found (or at least until June 2023).

However, more relevant to the performance of the shares were the results for the 12 months to 30 June.

These were materially ahead of expectations, supported by stronger growth in travel-related business and ‘exceptional’ trading in its consumer finance ‘Money’ vertical.

Revenue advanced 19% year-on-year to £193.2 million while EBITDA (earnings before interest, tax, depreciation and amortisation) was 10% higher at £56.6 million and there was a 14% advance in adjusted earnings per share (EPS).

The profit numbers were around 15% ahead of analysts’ forecasts, with the availability of ‘attractive’ savings products driving a very strong 50% increase in revenue for the Money arm.

This strong showing was delivered despite switching on energy prices having come to a virtual halt thanks to the absence of any attractive energy deals at a time when wholesale prices are surging and the energy price cap is set to go up again in October.

WHAT SHOULD INVESTORS DO NEXT?

Sit tight for now. In the wake of the results investment bank Berenberg upped its EPS forecasts for 2022, 2023 and 2024 by 8.8%, 6.4% and 7.1% respectively.

It also noted that Moneysupermarket’s new guidance ‘remains conservative as it implies a meaningful sequential decline in revenue and profit in H2 2022, which is unlikely, in our view, given the momentum across its core channels’.

Based on Berenberg’s upgraded forecasts the company trades on 17 times 2022 earnings falling to 14.3 times in 2023.

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