Up 10.7% today, this under-the-radar FTSE 250 stock still looks attractive to me

Moon Pig (LSE:MOON) stood out in the market FTSE250 today (June 25), flying 10.7% higher to 248p. This brings year-to-date growth to approximately 23%, easily beating the mid-cap index (+3.2%).

I had a feeling this might happen after I delved deeper into the company in December. That’s when I used the Moonpig app to create a personalized, AI-enhanced Christmas card for my daughter. I was impressed with this technology company’s client proposition.

Is it worth buying Moonpig Group Plc shares today?

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Since then, I’ve been highlighting Moonpig almost every month. However, I am still hopeful about the stock’s growth despite the higher share price. Here’s why.

Pigs can fly

As a reminder, Moonpig is the leading online greeting card manufacturer in the UK and the Netherlands (through the Greetz brand). Customers can personalize cards, add AI-generated stickers, create voice and video messages, and send gifts and flowers.

The company today published its results for the 12 months to April 30 (26). And despite the never-ending, nagging cost of living crisis, the numbers were solid:

Revenues rose 6.5% to £373m, with the flagship Moonpig brand growing 8.6%.
Adjusted pre-tax profit rose 13.4% to £76.5m, beating market consensus.
Adjusted earnings per share (EPS) increased 19.5%.
Free cash flow increased by 11.2% to £73.5 million.
Total dividend increased by 25%.

One of Moonpig’s key differentiators is its data advantage. Every time a novel customer buys a card for a birthday or anniversary, the customer reminder database grows.

Last year, that number grew 11.2% to 113 million, with about 40% of orders placed within seven days of the Moonpig/Greetz order reminder. Add to that the subscription service, which grew by 29.3% to 1.2 million members, and customer loyalty levels are high here.

Another thing I like is the popularity of original features, including AI stickers (where the tool generates a custom image for your card). They were added to 31 million greeting cards during the year, an boost of 102%.

Of course, artificial intelligence lowers the barriers to content creation for everyone. However, not every company has extensive order fulfillment capabilities, a trusted brand, and a dataset of 113 million customer reminders.

Every day, millions of customers entrust us with the most significant moments in their lives, from birthdays and anniversaries to celebrations… In a world increasingly shaped by technology and artificial intelligence, the interpersonal relationships we lend a hand create seem more significant than ever.
General Director Katarzyna Faier.

What worries me?

However, the year was not perfect. What was a bit disappointing for me was that the number of busy customers only increased by 2.8% to 12.3 million.

Do people who are more tired of inflation limit their card purchases at all? If this happens, it could become a short-term threat to economic growth.

Meanwhile, Greetz grew revenue by 1.5% in constant currency, suggesting it is struggling to achieve growth momentum compared to its UK operations.

That said, the Moonpig brand is seeing growth in novel markets (+33%), including Ireland, Australia and the US.

My takeaways

The company’s stock continues to trade at a reasonable level, at around 13 times forward earnings. Moonpig plans to repurchase shares worth £65m this year, following last year’s £62m buyback, which should lend a hand improve its key EPS metric.

Looking to the future, I remain hopeful. There is a structural shift in card purchasing, from offline to online, and Moonpig is leading the way with a vast and true customer base.

I think the stock is still worth considering.

Should you invest £5,000 in Moonpig Group Plc now?

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Ben McPoland has no position in any of the companies mentioned.