Investors gave online greetings card seller Moonpig (MOON) the ‘benefit of the doubt’ this morning, lifting its shares by 4% despite the company reporting a 6.9% fall in adjusted pre-tax profit to £48 million for the financial year to 30 April 2023.

Group revenue however was up 5.2% to £320.1 million compared to £304.3 million last year.

Nickyl Raithatha CEO said: ‘Today's results demonstrate the resilience of our business model which is rooted in the stability of the greeting cards market and our unique use of data to drive customer loyalty. We have high profitability, strong cash generation and inherent flexibility that allows us to respond rapidly to a dynamic macroeconomic environment.

‘We are innovating to differentiate and elevate Moonpig cards with embedded video messages, personalised content and the ability to include a gift experience within the card. We have continued to extend our market leadership in online cards, and we expect to return to growth during the year ahead, underpinned by our continued investments in our technology, marketing and operational capabilities.’

SIGNS OF RECOVERY

Back in December 2022, Moonpig cut sales forecasts for the year to April 2023 blaming the Royal Mail postal strikes, however in a brief trading update in March, the online greetings card seller reported a record week of sales in the run up to Mother’s Day and reaffirmed guidance for 2023 and seemed upbeat on fiscal 2024.

The company floated at 350p a share in February 2021 and hit a high of 430p on the first day of trading – a level not seen since. Their shares are still trading 60% below their offer price.

Analysts however are upbeat on Moonpig and forecasting a lot of earnings growth in the next two years.

Moonpig is currently trading on around 25 times earnings for the year just finished – still representing a big premium to the wider UK stock market.

Russ Mould, investment director at AJ Bell said: ‘Moonpig seems to be good at what it does, reflected in its market leadership status. This is not a bad market to be in either, as despite a difficult economic backdrop, most people still like to send a card to mark a milestone.

‘That resilience is reflected in its latest set of full-year results which showed some modest growth and reasonably robust margins and cash flow.

DISCLAIMER: Financial services company AJ Bell referenced in the article owns Shares magazine. The editor of the article (Martin Gamble) owns shares in AJ Bell.

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