There are plenty of FTSE 250 stocks paying generous dividends. And there are many others trading at historically low multiples. However, I’ve found one that looks cheap using both these measures.
Does this sound too good to be true? Let’s find out.
Which is it?
MONY Group (LSE:MONY) helps people save money on household bills and financial products via its five websites, including MoneySuperMarket and TravelSuperMarket. The group’s probably best known for buying MoneySavingExpert.com from financial journalist Martin Lewis in 2012.
Since then, it’s grown rapidly. Over the past five financial years, its earnings per share (EPS) has increased by 56%.
But a falling share price has pushed its price-to-earnings (P/E) ratio higher. The stock’s now (1 July) trading well below its five-year average earnings multiple of 16.5.
| Financial year (31 December) | Earnings per share (pence) | Share price (pence) | P/E ratio |
|---|---|---|---|
| 2021 | 9.8 | 216 | 22.0 |
| 2022 | 12.7 | 192 | 15.1 |
| 2023 | 13.5 | 280 | 20.7 |
| 2024 | 15.0 | 192 | 12.8 |
| 2025 | 15.3 | 184 | 12.0 |
Moreover, its dividend’s been increased by 7.9% since 2021. This means the group’s shares are yielding 6.8%, putting it in the top 10% on the FTSE 250.
However, like any business, the group faces a number of challenges, which could threaten its above-average dividend and impact its EPS.
Fears have been raised that AI will provide consumers with more opportunities to use chat interfaces, thereby bypassing the need for price comparison websites. In future, AI agents may act on behalf of users looking for the best deals.
Also, what the group does isn’t unique. There’s plenty of competition out there. Indeed, revenue and earnings growth have both slowed over the past couple of years. Having said that, analysts are forecasting EPS of 18.67p (2026) and 19.99p (2027) over the next couple of years.
No complacency
But MONY Group isn’t ignoring these threats. Earlier this year, it launched the MoneySuperMarket ChatGPT app. It helps its customers “find, compare, and understand deals quickly and simply”. It’s not intended to replace its website. Instead, the company claims it’s “a more conversational companion to our website and mobile app”.
Helping to improve the user experience, there’s no need to re-enter previously supplied information when looking, for example, for car insurance quotes.
The group also has a huge amount of data it’s collected over the years. It’s impossible to put a value on this but the one thing that AI needs in bucketloads is information.
The group also retains a net cash position and enjoys strong brand recognition. MoneySuperMarket is the UK’s most recommended price comparison website. In addition, MoneySavingExpert (MSE) is the country’s most recommended consumer finance brand. Interestingly, it’s also the UK’s third most popular news app. And remember, Lewis, who remains Executive Chair of MSE, has been described as the most trusted man in Britain.
Impressively, if the group’s shares traded at 16.5 times earnings, it means someone investing £10,000 today could see it grow to £13,622. In addition, they could pick up dividends of £680 over the next 12 months. Accordingly, I think the shares could be described as dirt cheap.
On balance, for both its income and growth prospects, I think MONY Group’s a stock to consider.
Should you invest £5,000 in Mony Group Plc right now?
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James Beard owns shares in MONY Group plc.
