Moneysupermarket resilient in the face of energy price storm

While a roaring return to holiday travel might be causing chaos at airports, it has been a boon for Moneysupermarket (MONY), which reported year-on-year revenue growth of 19 per cent in its latest results, helped along by increased volumes linked to travel insurance. 

The price comparison website – which lets users scrutinise rates for a range of financial products – reported strong growth in its money and travel divisions. As a result, its first-half performance exceeded expectations, despite the closure of the energy switching market. 

Persistently high wholesale energy prices mean that there are no switchable tariffs currently available on the website. Revenues for the home services channel consequently fell by 59 per cent. 

However, the asset-light business has been able to maintain decent cash flows despite utility sector headwinds. It recorded an operating cash flow of £45.9m (up from £35.1m for the first six months of last year). Its net debt figure of £69.1m largely reflects the acquisition of cashback site Quidco.

Looking forward, the company could see continued pressure in the motor and home insurance markets. At the start of the year, the Financial Conduct Authority banned insurers from charging renewing customers more than new ones, which has impacted policy switching volumes.

Peel Hunt analysts noted that the diversified nature of the business means that any hit to revenues brought about by the regulations has “been balanced by better performance elsewhere”. The company’s management now expects to deliver cash profits at the top end of consensus for the year, and Peel Hunt has increased its FY2022 revenue forecast by 5 per cent. As macroeconomic conditions weigh on households, price comparison sites may find they are in greater demand despite falling discretionary incomes. Buy.

Last IC View: Buy, 191p, 17 Feb 2022