GoCompare makes new year comeback
GoCompare (GOCO) 73.5p
Gain to date: 18.5%
Original entry point: Buy at 62p, 24 November 2016
The financial products comparison website has started to catch the market’s attention with news that 2016 earnings before interest and tax are slightly better than market expectations.
It also reports strong cash generation which is helping to reduce leverage – net debt dividend by earnings before interest, tax, depreciation and amortisation (EBITDA).
The business took on £75m of debt to cover the costs of demerging from Esure (ESUR) in November 2016 and a departing dividend, thereby pushing up leverage to 2.8 times. It now says leverage has been reduced to less than 2.0 times at the year end.
We originally said to take advantage of share price weakness following its demerger from insurer Esure in November 2016 and that trade is now paying off. We note chief executive Matthew Crummack seems very confident in the latest trading update, saying he expects to deliver ‘another year of strong growth’.
Full year results on 2 March should help to further educate the market about GoCompare’s capabilities and strengths. Keep buying. (DC)
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell Youinvest.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.