- Travel and motor insurance lead the way
- Still waiting on energy switching revival
- Shares up nearly 30% year-to-date
A big improvement in people shopping around for car and travel insurance policies was the key driver behind the 15% revenue growth for Moneysupermarket (MONY) in the first quarter of 2023. It is paid commission by product providers when someone uses its platform to take out insurance, credit cards, loans and other products.
It is still waiting for the energy switching market to improve. While it is not guiding for any significant contribution from this part of its business in 2023, there are encouraging signs that utility companies are tentatively launching new deals which might led to customers moving providers.
Russ Mould, investment director at AJ Bell, said: ‘There is an argument that Moneysupermarket’s services have never been more crucial. With households watching every penny the incentive to look for a better deal on regular bills is as high as it has ever been.
‘Price comparison remains a highly competitive market and that means a chunky marketing cost for Moneysupermarket to keep its brand front of mind. Though it does have an advantage due to its longevity and existing brand awareness.’
Shares in the company were up 1.4% by mid-morning trading, extending a good run for the stock which has risen by nearly 30% year-to-date.
INSURANCE AND TRAVEL LEAD THE WAY
Moneysupermarket grew its revenue from the sale of travel insurance policies via its website by 63% to £5.4 million in the first quarter period. That tallies with the message from the airline industry where leading players have reported strong demand in recent months for foreign travel.
The price comparison website provider grew its revenue from general insurance, which covers home and motor policies, by 23% to £50.6 million in the first three months of 2023. The comparative period last year was negatively affected by regulatory changes to the general insurance whereby policy providers were no longer able to charge more for existing customers versus new ones.
Motor insurance providers last year were hurt by rising claims inflation which has led to them pushing up prices going into 2023. That has spurred on customers to look for better deals rather than renew with their existing provider.
Peter Duffy, CEO of Moneysupermarket, said: ‘Our strategy of making it easier for people to save on more of their bills is going well and means we're helping consumers cope with cost-of-living pressures.’
There was also a 9% rise in revenue from financial products sourced via Moneysupermarket’s website to £26.9 million, reflecting ‘strong promotional offers in banking’ although this was partially offset by the continuing weakness in credit products, particularly in loans.
WHAT DO ANALYSTS THINK?
Analyst Roddy Davidson at Shore Capital said: ‘We are pleased to note the positive momentum and outlook assessment highlighted which adds confidence to our expectation of attractive medium term EPS growth, robust cash generation (average three-year conversion 115%) and a growing dividend. Specifically, our fair value estimate of 323p suggests c.30% upside potential and grounds for a continuation of positive share price performance.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The editor of this article (Daniel Coatsworth) owns shares in AJ Bell.
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