It does not need a look at a price comparison website to see that Moneysupermarket.com – down 37 per cent from its debut – was not the best bargain among last year’s bigger-ticket flotations. But the question prompted by yesterday’s slide to 106½p is whether Britain’s largest aggregator of online quotes for everything from mortgages to mobile phones now offers better value.

A quick scan of yesterday’s first-half trading update might suggest so. Revenues continue to grow strongly – at more than 25 per cent, broadly similar to last year, and a feat that few other mid-cap media stocks can match. The company has also maintained operating margins at about 30 per cent, which implies it is on track to meet operating profit forecasts of £62 million.

What is disconcerting – albeit inevitable – is the rate of slowdown in loans and mortgages, once its biggest products, where trading conditions are described as “extremely challenging”. With banks unwilling to lend, and new mortgage approvals having fallen to a record low last month, Moneysupermarket’s sales have fallen in line, although this is offset partly by growth in credit cards and savings. The upshot is that second-quarter divisional revenues were down 13 per cent.

But the company is also benefiting from the credit crunch: belt-tightening and an increasing propensity to shop around have helped first-half revenues from insurance products (principally car and home) up 50 per cent year-on-year, with the second quarter reassuringly stronger than the first – which is usually the busiest. That means insurance has become its biggest category for the first time in its nine-year history.

That switch is testimony to the power of its brand and diversity of its business model and provides encouragement that the two new channel launches planned for the second half will make up for flagging revenues elsewhere. So, too, does the fact that about 60 per cent of Moneysupermarket’s traffic now comes direct to its site – against about 25 per cent three years ago – which mean that it is steadily paying less in commission.

Near-term challenges remain, not least the recent launch by Google of a rival, albeit so far rudimentary, price comparison website for loans in the UK. At 12 times current-year forecasts, the shares are cheap for an e-commerce play with a dominant market position. However, until it is clearer how the longer-term effects of the credit crunch unfold, prospective buyers should stay on the sidelines.

DSG International

It may not be a disaster on the scale of Silo, its ill-timed US foray of the late 1980s, but the overseas strategy that has driven DSG International over the past decade has gone badly awry. That much was evident from yesterday’s full-year figures from the PC World and Currys owner, in which a £389 million impairment charge, largely related to the restructuring of UniEuro in Italy, pushed the group into a £193 million pretax loss.

In itself, the closure of nearly a quarter of its stores in Italy should not signal the failure of DSG’s ambitions to create a pan-European electricals retailer. What is troubling is that weakness is not confined to Southern Europe. It is also apparent in the usually strong Nordic region, where the 1999 acquisition of Elkjøp signalled the start of DSG’s latest expansionary phase. After long-running concern that the rollout of Germany’s MediaMarkt in Sweden would take its toll, it now appears to be doing so. Markantalo, DSG’s Finnish business, is also suffering.

The turnaround plan unveiled last month by John Browett, DSG’s new chief executive, appears sound but the effects will be slow to feed through. Meanwhile, structural pressures on the group – such as the deflationary effect of online competition – can be increased only by the cyclical hit of a consumer downturn. After a 74 per cent slide in the shares over the past 12 months, the gloom would appear to be priced in at yesterday’s 42½p. However, even at less than nine times current-year earnings and yielding 8 per cent on the final dividend alone, DSG’s high operational gearing – and the associated risk of further profit warnings – mean that it is still too soon to buy.

Scott Wilson

A day after full-year figures from WS Atkins, yesterday’s numbers from Scott Wilson provided a further reminder that prospects of Britain’s better-managed consulting engineers are brighter than their share prices might suggest.

Revenues from the transport and infrastructure specialist were up 24 per cent, or a solid 10 per cent once the effects of acquisitions are stripped out, with a strong showing from its international businesses helping operating margins up from 6.2 per cent to 7 per cent and closer towards its longer-term double-digit target. Strong cashflow pulled net debt down to a negligible £7 million, while the company’s order book rose to a record £280 million.

Some 60 per cent of this year’s turnover is already secured, against 55 per cent this time last year. Such virtues had little effect on the shares, down 3 per cent yesterday, or 31 per cent on the year, caught up in its sector’s retreat on fears of the fallout from a commercial property slowdown. In Scott Wilson’s case, this appears unfair given that the sector accounted for just 5 per cent of sales.

In contrast, transport, environment and natural resources account for 71 per cent, where a strong position overseas – especially in India and China – means demand should remain firm. At 220½p, or 12 times forward earnings, Scott Wilson is given little credit for its brand, balance sheet or the likely consolidation of its sector. The prospect of bolt-on acquisitions to enhance earnings adds to the allure. Buy.

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