In This Article:
Moneysupermarketcom Group PLC (LON:MONY), a UK£1.5b small-cap, operates in the retail industry impacted by the digital transformation for all retail channels. Digital’s growing impact has reduced the barriers to entry for new brands and created competition where scale and retailer relationships have historically provided a moat. Retail analysts are forecasting for the entire industry, a highly optimistic growth of 32% in the upcoming year , and an enormous growth of 61% over the next couple of years. This rate is larger than the growth rate of the UK stock market as a whole. I’ll take you through the retail sector growth expectations, and also determine whether Moneysupermarket.com Group is a laggard or leader relative to its retail peers.
View our latest analysis for Moneysupermarket.com Group
What’s the catalyst for Moneysupermarket.com Group’s sector growth?
Mobile and automation allow online retailers and brands to scale services in order to make the purchase path as seamless as possible. Various outsourced capabilities in areas such as payments and shipping enables these retailers to scale their business faster than ever before. In the past year, the industry delivered growth in the teens, beating the UK market growth of 15%. Moneysupermarket.com Group lags the pack with its lower growth rate of 5.8% over the past year, which indicates the company has been growing at a slower pace than its online retail peers. Moreover, the trend of below-industry growth rate is expected to continue in the future with Moneysupermarket.com Group poised to deliver a 13% growth compared to the industry average growth rate of 32%. As an industry laggard, Moneysupermarket.com Group may be a cheaper stock relative to its peers.
Is Moneysupermarket.com Group and the sector relatively cheap?
Online retail companies are typically trading at a PE of 33.64x, higher than the rest of the UK stock market PE of 16.32x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry did return a higher 18% compared to the market’s 12%, which may be indicative of past tailwinds. On the stock-level, Moneysupermarket.com Group is trading at a lower PE ratio of 18.9x, making it cheaper than the average online retail stock. In terms of returns, Moneysupermarket.com Group generated 47% in the past year, which is 29% over the online retail sector.
Next Steps:
Moneysupermarket.com Group is a online retail industry laggard in terms of its future growth outlook. This is possibly reflected in the PE ratio, with the stock trading below its peers. If the stock has been on your watchlist for a while, now may be the time to dig deeper. Although the market is expecting lower growth for the company relative to its peers, Moneysupermarket.com Group is also trading at a discount, meaning that there could be some value from a potential mispricing. However, before you make a decision on the stock, I suggest you look at Moneysupermarket.com Group’s fundamentals in order to build a holistic investment thesis.