GoCompare (GOCO) and Moneysupermarket (MONY) have both decided that increasingly aggressive marketing strategies are not the key to growth in the super competitive world of online price comparison. The latter has enjoyed success with its new consumer friendly site which sent revenue per active user up to £15.40 in the first six months of 2018. GoCompare’s approach has been to focus marketing on more profitable customers, and while this sent revenue per user up 8 per cent to £4.80, customer numbers fell 13 per cent to 14.9m. Daily share price movements following both sets of results show which strategy investors are more impressed with: Moneysupermarket climbed a tenth in early trading, GoCompare was down by the same amount.
We agree that it is right to be wary about the outlook at GoCompare. True, management cut marketing costs – which helped send adjusted cash profits up 21 per cent to £22m – but this came at a cost to overall revenue growth. Moreover, at 53 per cent of revenue, group marketing spend isn’t exactly cheap.
But it’s not all bad news. The recent acquisition of MyVoucherCodes allowed GoCompare to sign a partnership with News UK to power The Sun newspaper’s discount vouchers platform, while Energylinx and MortgageGym should widen its price comparison offering. Broker Peel Hunt thinks these acquisitions will help boost adjusted EPS to 8.1p in 2018, from 6.3p last year.
| GOCOMPARE.COM (GOCO) | ||||
| ORD PRICE: | 122p | MARKET VALUE: | £510m | |
| TOUCH: | 121-122p | 12-MONTH HIGH: | 143p | LOW: 90p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 20 | |
| NET ASSET VALUE: | * | NET CASH: | £14.7m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 75.8 | 14.7 | 2.8 | 0.7 |
| 2018 | 75.8 | 15.9 | 3.1 | 0.8 |
| % change | - | +8 | +11 | +14 |
| Ex-div: | 13 Sep | |||
| Payment: | 5 Oct | |||
| *Negative shareholders' funds | ||||
