Pensions are a massive business in the UK with more than 40% of UK wealth being held in them, which provides a vast market for today's stock recommendation. Yet, the subject is one people often avoid and do not pay much attention to. The neglect most people have for their pensions and the difficulty surrounding transferring a pension leads to less than stellar customer service.
PensionBee (LSE:PBEE) aims to simplify the process of consolidating all your pensions into one account. This fresh take on a dusty old market has resulted in them winning two "Pension provider of the year" awards in 2020. The problem PensionBee addresses will only grow with time as the UK rolled out automatic workplace pension enrollment for all companies as early as 2018. Considering the average brit has 11 different jobs in their lifetime, that's a lot of people who will eventually have 10 different pensions, all with different providers.
Some financials
| metric | amount |
|---|---|
| Net profit margin | -193.14% |
| Return on investment | - |
| PE Ratio | - |
| Forward PE | - |
| EPS Growth Rate | -55% |
| Market Cap | £216m |
| Share price | £0.97 |
| Book value per share | £0.20 |
Caveats
From a customer growth and acquisition standpoint, PensionBee is doing fantastically. However, they are still making substantial financial losses which are growing year on year. The counterargument to this point is that with 95% customer retention, it is a better idea to get as many customers as possible through the door before focussing on profitability. Right now, good customer service and mass marketing will be the key to future success.
Another risk is competition from other startups or the incumbent monoliths. In their promotional material, they argue that "there are other pension consolidation startups, but it's difficult to do, and we've been doing it longer", fair enough - a moat is a moat.