When Moneysupermarket.com Group (LSE: MONY) floated in July 2007 it was the largest internet firm flotation UK markets had handled, second only to Google globally for a debut valuation. The flotation flopped as the share price slumped to 157p from 170p.
Described as a “price comparison website”, it handled close to half of all price comparison search traffic in the UK. The business has moved on considerably since 2007, from the days when it charged financial firms a click-through commission for each potential customer.
If you hold shares now, you’re in good company: its major shareholders include BlackRock, Aviva, Standard Life Aberdeen and State Street. Its management team is full of talent including CEO Mark Lewis, whose CV includes a stint as the Managing Director of eBay UK.
Buying the advice website Money Saving Expert from Martin Lewis in June 2012 for £87m was a masterstroke. As an expert providing down-to-earth, practical advice, Mr.Lewis is highly active and respected. The unique selling point of the firm was underscored by that acquisition and its mission has remained steadfast: you visit moneysupermarket.com and its other sites (such as travelsupermarket.com) to save money or to discover best value. That money-saving ideology has continued as consumers’ budgets have become more stretched.
The fundamentals look good, as does its positioning and future
Last week the share price reached an all-time high of 411p. It has a valuation of circa £2.17bn, but it’s not overvalued in the opinion of this Fool and, at 25.22, the price-to-earnings ratio isn’t elevated. In the last full-year report up to December 2018 the firm posted pre-tax profits of £107.1m, a steady rise since recording profits of £65.9m in 2014. Revenue has increased from £248m to £355m in the same period. The fears my fellow Fool Royston justifiably had last year have receded.
Despite intense competition from GoCompare, Moneysupermarket.com Group has held onto its market-leading position, whereas Tesco’s attempts to enter the market floundered. The firm has progressed with its “Reinvent Strategy”, saving customers £2.1bn in the accounting period up to December 2018. It has invested considerable sums optimising its sites, making saving far easier. Its stated ambition is to “take price comparison to the next stage” by offering its customers more personalised ways to save money on household bills.
Big data is big business, and with 12.9 million active customers generating £15.90 each, the upside due to the dawn of A.I. and the opportunities the firm has for personalisation and cross selling is considerable. In my opinion the firm is sitting on a goldmine of opportunity to leverage its data.
Many Fools would have preferred to buy close to the yearly low of 258p; however, you acquire shares in sectors for many reasons, not necessarily short-term price increases.
The dividend has risen by 6%, to 11.05p per share. As a financial sector stock, the firm represents a sound investment and should be a hold for some time to come, or an addition to your portfolio (an opinion echoed by my colleague Andy earlier this month). Look out for the firm posting its 2019 interim results on 18 July.