Is Moneysupermarket silently egging on recession? The comparison site thrives on Britons having emptier wallets. “Start saving serious money today,” screams its home page. Compare your car, home, life, pet and travel insurance, it begs. Find a good broadband, mobile, credit card or loan deal.
Amid the soaring cost of living, more of us will now be using its services to save money, bolstering the commission it slices from each purchase. This makes Moneysupermarket — whose shares are down 37 per cent over the past 12 months, closing last week at 173p — an obvious buy right now.
And yet it is not all systems go for the site. Revenues from energy, which contributed £70 million to turnover in 2020, have fallen to nothing over the past six months as record energy costs mean no cheap tariffs to switch to. Meanwhile, insurance has been hit by the regulator’s move in January to ban companies from offering new customers cheap deals that were not on offer to existing policyholders. For the first three months of this year, revenues from insurance — the largest part of its empire — were flat at £41 million, a sharp turnaround for a division that has grown every year since 2009, apart from a Covid-era blip.
Still, the stock seems to have been punished too far. Moneysupermarket has a 7 per cent dividend yield, while its shares are trading at about 13 times earnings for this year. “The worst is past,” said Citi analyst Ross Jobber. “The shares should start to react positively, albeit with more focus on the second half of the year.”
The site’s travel division is now back at pre-pandemic levels. Its money arm — which rates credit cards, loans and bank accounts — beat City expectations by growing 37 per cent in the first three months of the year as the Bank of England started to raise interest rates.
Moneysupermarket bought shopping cashback site Quidco for £87 million last autumn. It contributed £14 million in revenues in the first quarter of this year and its appeal looks set to grow as straitened household budgets emphasise the importance of small savings. Another valuable Moneysupermarket division is Martin Lewis’s MoneySavingExpert, bought a decade ago, also for £87 million, and still a trusted source of financial advice. Occasional rumours swirl of private equity interest too.
But even without that, “rising interest rates and a cost-of-living squeeze should act as the impetus for greater consumer interest in switching as the year progresses”, Jobber added.
Moneysupermarket can cash in on a lack of cash. Buy.
