Shares in this marketing firm are a real bargain

Jaywing uses data to help companies learn and engage with the public
Thursday 09 Feb 2017 Author: Daniel Coatsworth

We’re excited about the prospects for marketing company Jaywing (JWNG:AIM) amid growing demand for data analysis.

One in 10 people working at Jaywing are data scientists, namely statisticians, computer scientists or mathematicians.

Jaywing helps companies to understand what the public is saying about them on social media like Twitter.

It can match online behaviour such as buying goods to what people do away from computers or phones in their day-to-day life.

The £30m market cap also helps companies to monitor competitors’ prices, product ranges and promotions.

Privileged access to Google coding

Jaywing is one of only five companies in UK given priority access to new Google algorithms, thanks to a partnership with the technology group. This privilege makes Jaywing highly attractive to clients looking to maintain a dominant position on search engine rankings, another part of its skill-set.

JAYWING - Comparison Line Chart (Rebased to first)

Companies like Moneysupermarket (MONY) have seen their earnings hit in the past by Google continuously changing its search algorithms. A brand can slip down the search results for terms like ‘cheap insurance’ unless it can quickly find new ways to optimise its websites and alter marketing techniques.

Long term contract benefits

Jaywing has attractive levels of recurring revenue, low debt and a very low equity valuation. It trades on a mere 8.4 times forecast earnings for the year to March 2018 which is far too cheap in our view.

One reason for this low rating is market concerns over marketing budgets being scaled back if tough Brexit negotiations and rising inflation dent consumer confidence and weaken the UK economy.

It doesn’t help that fellow stock market-listed marketeer St Ives (SIV) has issued several profit warnings over the past year, weakening sentiment towards the sector.

St Ives’ problems were caused by high exposure to the troubled food retail market. In comparison, Jaywing has a broad spread of customers including travel group Dart (DTG:AIM), housebuilder Redrow (RDW), HSBC’s (HSBA) First Direct bank, leisure expert Merlin Entertainments (MERL), drinks giant Pepsico (PEP:NYSE) and car maker Toyota (7203:TYO).

There is also a defensive slant to its earnings. Jaywing helps lenders comply with accounting standards in terms of how much capital they should hold. It says there is little competition in the UK for this service and work is driven by regulation, not by marketing budgets.

The next news should be a trading update by early May and results in July.


Jaywing (JWNG:AIM) 34.5p

Stop loss: 24.15p

Market value: £30m

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