IBG in 2005

lrr

IBG

Market Cap £10.86m

Year Ending Sales (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield
31-Oct-05 5.95 0.41 0.60p 26.3 n/a n/a n/a 0.0%
31-Oct-06 8.50 0.84 1.21p 13.0 0.1 +102% n/a 0.0%

DGM

Market Cap £20.76m

Year Ending Sales (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield
31-Dec-05 23.00 0.30 0.27p 20.3 n/a -50% n/a 0.0%
31-Dec-06 34.00 2.28 0.64p 8.6 0.1 +136% n/a 0.0%


My main comment/observation about IBG vs DGM, based on the above figures, would be one of momentum.

IBG is in a state of rapid ascendancy and DGM is in a state of rapid descendancy - and I'm not referring to the shareprices either.

For DGM's 2006 forecast to be fulfilled requires a very strong and marked turnaround in fortunes to take place. At the moment that doesn't look imminently likely IMO as there is mass dissatisfaction and disquiet amongst their affiliates and we see high-profile merchants leaving. This doesn't bode well.

On the other hand the 2006 forecast for IBG is likely to prove somewhat conservative. IBG have a history of not over-egging expectations and this week we have seen a strong surprise to the upside (profits to exceed expectations by 40%).

IBG merchants seem very happy, DGM merchants seem to be less so and there is evidence of affiliates switching links from DGM to IBG. None of this momentum swing is factored into those forecasts. Also DGM's cost base is substantially higher than IBG's, so they are quite vulnerable to any potential change of fortune.