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With the stock at multi-year lows and yielding 7% we think it’s time to buy
Thursday 05 May 2022 Author: Ian Conway

A new study by Which? has found nearly one in 10 people (8%) are taking out new credit cards to cope with the cost-of-living crisis. Moneysupermarket (MONY) is one of the first places people visit when looking for deals on financial products.

With the price of everything from food to fuel and mortgage payments expected to keep rising, it’s no wonder consumers are turning once again to price comparison sites.

It’s time investors did the same, especially with shares in Moneysupermarket trading at multi-year lows.

Right now, market sentiment towards comparison websites is firmly bearish given their inability to make money on energy switching with so few firms willing to offer a quote.

We appreciate this situation could last beyond the price cap going up again in October, in which case we might be early with our call on the stock, but when valuations are this attractive it can often pay
to be early. Moneysupermarket trades on a mere 12.6 times forward earnings.

Comparison sites can help cash-strapped customers save money on insurance, broadband, loans and credit card deals.

While demand for motor insurance dropped sharply during lockdown, with the economy fully reopen traffic levels are recovering as more people use their cars.

Drivers can’t do much about the price of fuel or road tax, but they can cut back on their running costs like insurance, MOT and servicing thanks to Moneysupermarket’s ‘Super Seven’ offering.

So far this year, the travel and money divisions have been the company’s two key drivers of earnings growth, the former thanks to the recovery in the number of people shopping for holidays and travel insurance.

Cashback has added to revenue growth following the acquisition of Quidco, while insurance revenues were flat due to a lower level of switching.

Analysts see the travel and money businesses remaining robust for the rest of the year, with the main risk being a further slowing of revenue growth in the insurance arm.

Gresham House head of public equity Ken Wotton believes, despite the temporary disruption from energy prices, consumers will continue to use firms such as Moneysupermarket, which is at its lowest price to earnings valuation for years with an inflation-rivalling 7% dividend yield.

‘Moneysupermarket has a really attractive, low-cost customer acquisition engine in MoneySavingExpert, which it acquired a few years ago,’ he adds. Saving money is front of mind due to the squeeze on the cost of living and the site has a strong reputation for trusted expertise and advice, argues Wotton.


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