By - Suhita Poddar
Highlights
- Moneysupemarket.com’s shares surged after announcing Quidco acquisition and reporting strong gross margins despite a drop in Q3 2021 revenues.
- RHI Magnesita has made some significant price increase to pass on to its customers.
Mid-cap stocks can often offer some interesting investment options as such stocks have less amount of volatility compared to smaller cap stocks. Due to some stocks being temporarily impacted by the ongoing supply chain issues, Brexit and more, some good FTSE 250 stocks are still trading below their 2020 levels and can be a value buy.
Let us explore two such FTSE 250 index listed stocks, Moneysupemarket.com Group PLC and RHI Magnesita NV and see how they are faring.
Moneysupemarket.com is a financial services price comparison site.
The group, in its latest trading statement, reported that total revenue in Q3 2021 dropped by 10 per cent to £76.4 million. Though its revenues fell in Q3 but its gross margins continued to remain strong.
The group also said it does not expect the energy market scenario to improve in 2021 and thus expects switching to be negligible in Q4 2021. Switching had earlier accounted for 16 per cent of the group’s revenue in Q4 2020.
The company further said that it would be acquiring a 100 per cent stake in the leading consumer cashback firm, Maple Syrup Media, which trades as Quidco. The group will acquire Quidco for an initial cash consideration of £87 million and a further deferred amount of £14 million.
The company became the highest riser on the FTSE 250 index following the news.
(Image source: Refinitiv)
Moneysupemarket.com’s shares were trading at GBX 219.60, up by 8.18 per cent on 19 October 2021 at 11:56 AM BST. Meanwhile, the FTSE 250 index was at 23,058.49, up by 0.39 per cent.
The company has a market cap of £1,089.83 million as of 19 October 2021.
RHI Magnesita is a supplier of refractory products, systems and services.
The company in its Q3 2021 trading update, said that its FY 2021 earnings before interest, tax, depreciation and amortisation (EBITDA) might remain between EUR 280 million and EUR 310 million, which would depend upon price and cost increases.
The company had earlier expected its FY 2021 EBITDA to be at EUR 310 million. RHI also said its Q3 2021 profitability was weaker than anticipated though in line with H1 2021 due to cost increases such as increased sea freight and demurrage costs, higher energy prices, consumable expenses and more.
The company thus made some significant price increase pass on to its customers, thus benefiting from the hike in prices. Moreover, the company also witnessed strong demand from both its steel and industrial business segments.
RHI also reported its plans to acquire an 85.22 per cent stake in Turkey-based refractory producer SÖRMAÅž for a cash consideration of EUR 38.8 million as part of its strategy to increase presence into under-represented territories.
(Image source: Refinitiv)
RHI Magnesita’s shares were trading at GBX 3,140.00, up by 6.30 per cent on 19 October 2021 at 12:12 PM BST. The company has a market cap of £1,388.35 million and a one-year return of 13.24 per cent as of 19 October 2021.
Bottom Line
While some mid-cap FTSE 250 stocks can be of good quality, investors must keep an eye out for how companies are managing rising cost pressures and shortages due to nationwide supply chain issues, Brexit or other factors.