This FTSE 250 high flier is down 10% today! Here’s what I’d do right now

Harvey Jones says this crashing FTSE 250 (INDEXFTSE:UKX) stock may still be expensive despite today’s share price fall.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Price comparison sites have been a big deal for the last decade as tens of millions log on to compare financial products online. Investors have reaped the rewards too, with the (LSE: MONY) share price up 108% over the past five years. Its outperformance has continued this year, with the stock up 32% compared to 12 months ago.


It has gone into sharp reverse today with the share price crashing 10% after a disappointing, but hardly disastrous, Q3 trading statement. The site’s current motto is Get Money Calm, but today investors are in a selling frenzy. This could be an opportunity for those who believe in the group’s longer-term prospects. 

Today’s update was bullishly headlined “Revenue grows 4% as energy outperforms”, but investors chose to focus on less impressive numbers, primarily the 5% drop in revenues from its Money division to £20.6m.

Quarterly revenues from Home Services (which includes energy) compensated by growing a healthy 21% to £17.7m, but this slowed from 40% growth when measured over the nine months to 30 September.

Revenue growth in its Insurance division, which accounts for half of all sales, remained solid at 3% to £49.9m, despite the “subdued premium environment”. CEO Mark Lewis warned that although overall trading dynamics should continue to the end of the year, Money will “weaken”. However, the board remains confident of meeting full-year market expectations.

There were signs of a slowdown in July, when I warned the group has to keep growing fast to justify its toppy valuation of 22 times forecast earnings. Today it still looks pricey at 21.4 times forward earnings, with a price-to-revenue ratio of 5.3. City analysts remain optimistic, suggesting earnings will rise 4% this year and 9% next, when the dividend will hit 3.3%.

Moneysupermarket has a strong brand and mobile functionality, and the over-crowded market has been whittled down to just four major competitors: Compare the Market,, GoCompare and uSwitch. The stock may still tempt, but given today’s pricey valuation you might want to look elsewhere in the FTSE 250.


GoCo Group (LSE: GOCO) has been flying lately, its share price jumping 16% in the last week (30% over the month), despite July’s interims showing year-on-year revenue growth of just 0.3% to £76m.

Its numbers show the difficulty of competing in this market, with price comparison revenues flat and car insurance conversion of just 1.2 percentage points, “broadly offsetting marketing inflation in a competitive market”.

GoCompare has been looking to drive growth – or at least maintain its market position – with new services such as WeFlip, and the recent acquisition of the Look After My Bills service, which has more than 150,000 live customers, for £12.5m.

The group is keen to stress its “disciplined financial performance”, essential in such a competitive market, and is looking to add a new revenue stream by developing proprietary technology platform SaveStack, striking a recent partnership with CYBG/Virgin Money.

Again, GoCompare looks pricey 21.1 times forward earnings, given low growth prospects and a forecast yield of just 1.4%. Investors have been piling in lately, but this remains a tough sector to make money in.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

The National Grid share price just plunged another 10%. Time to buy?

The National Grid share price is one of the FTSE 100's most stable, and nothing much happens to it? Well,…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

Up 15% in 3 months, but I still won’t touch Vodafone shares with a bargepole

Harvey Jones has been shunning Vodafone shares for years. The FTSE 100 stock is finally showing signs of life, but…

Read more »

Growth Shares

This UK stock could be like buying Nvidia in 2021

Jon Smith thinks he's missed the boat with Nvidia shares, but flags up a UK stock that has some very…

Read more »

Businesswoman calculating finances in an office
Investing Articles

The FTSE 100’s Intertek delivers a bullish update — can the share price soar?

I’d describe Intertek as a quality business with a decent dividend income, but will the share price shoot the lights…

Read more »

Market Movers

Up another 10% yesterday, how high can the Nvidia share price go?

Jon Smith talks through the latest results but flags up why further gains could be harder to come by for…

Read more »

Investing For Beginners

Down 43% in a year, I think this value stock is primed for a comeback

Jon Smith flags up why a FTSE 250 share has fallen so much in the recent past, but explains why…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Nvidia stock is stupidly expensive. Or is it?

Nvidia stock's up over 2,000% in the past five years. Christopher Ruane explains why it could be wildly overvalued --…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

The FTSE 100 stock I’ve been buying this week

Stephen Wright thinks the FTSE 100 slipping back this week has offered an opportunity in one of the highest-quality UK…

Read more »