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iSelect continues to disappoint investors

Comparison website owner iSelect (ASX: ISU) has released its full year results and the first set of results since listing on the bourse in late June. The company’s actual results failed to meet its prospectus forecasts which would appear to be weighing on the share price today. Sales volumes fell 0.2% short of forecasts, with revenues 2.9% short and net profit after tax (NPAT) 0.8% short.

Stepping back from iSelect’s performance compared to prospectus guidance, based on actual results iSelect has recorded a boost in sales volumes by 18.9% to $201 million, an increase of 5.5% in revenues to $118 million and 11.6% growth in NPAT to $14.4 million (excluding IPO costs).

There are some positives contained within the results including a boost to leads generated and an improvement in the conversion rate; however, worryingly for shareholders earnings margins in health and car insurance – which is the major contributor to iSelect’s earnings – fell 5%.

For investors who took part in the initial public offering (IPO) at $1.85 per share they are yet to see the stock trade above that price. With the shares falling around 4% after release of the results to $1.66 and little in the way of solid guidance for FY2014, it could be a while till the IPO price is seen again.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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