Broadly unaffected by the coronavirus crisis, home repairs firm Homeserve (HSV) is a FTSE 250 firm worth owning right now.

The £3.8bn market cap company is well-placed to come through the crisis with its growth trajectory intact.

A provider of home repair services, Homeserve operates a recurring membership model for its customers and covers them in the event of emergencies such as gas, plumbing and electrical issues.

Berenberg analyst Callum Battersby thinks these recurring revenues will make it a resilient business in the short-term. This makes sense as, with people spending time at home, we are even more reliant on our central heating, hot water and lights and sockets.

Notably, the company grew its policy book in each of 2008, 2009 and 2010 despite the financial crisis raging in the background.

In a worst-case lockdown scenario, Berenberg foresees that marketing campaigns (which typically take place in winter) could be paused, which would affect new customer growth. But even this is far from a disaster.

New customers for Homeserve are typically loss-making in year one, breakeven in year two and only profitable in their third year on the service.

Paradoxically, this means that there would actually be a benefit if business development projects are cut towards the end of the year (albeit future growth would be lower).

There could be a negative impact on the group’s loss-making platform businesses, Checkatrade, eLocal and Habitissimo.

These platforms market more discretionary trade jobs, and therefore will be hit by falling demand under a lockdown scenario.

While Homeserve will cut marketing expenses to offset this slowdown in demand, Berenberg expects it to continue investing in the platforms, resulting in an increase in the division’s losses.

In the near term, this could largely offset continued growth in membership earnings, although it will support the medium-term growth for these websites.

Well established in the UK and France, where it has grown the business to maturity, Homeserve is aiming to crack America.

Berenberg points out the US market is significantly bigger yet ‘largely untapped’, and thinks that US growth can double Homeserve’s profits in the next three to five years.

The company is still relatively expensive and does trade on 23 times its 2021 forecast earnings. Ultimately, investors face a choice at present between buying out of favour businesses which are heavily exposed to coronavirus with all the risks that entails, or paying up for the reassurance of a business like Homeserve which has a much clearer outlook.

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