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Talk is cheap. Particularly at UK party conference time when polls attempting to quantify voting intentions are widely quoted. That gives currency to the name of pollster YouGov. But the small scale of the market for political opinion polls means the company has shifted away from these roots over the past two decades.
Today, the group offers more profitable marketing research to clients including the likes of Netflix. Debut full-year results from newish chief executive Steve Hatch on Tuesday were healthy, confirming a previously cheery outlook. The share price leapt by a fifth.
A share price resembles a poll rating of market opinion. Investors were braced for the worst. The price to forward earnings multiple at 16 times had slipped to seven-year lows. Shareholders feared retrenchment by YouGov’s tech clients, who provide 14 per cent of revenue. A month ago a poor update from S4 Capital, also dependent on tech clients, smashed its market value. It has fallen further since.
YouGov has itself suffered a remarkable sentiment downswing among its market constituency. A fast-growing, cash-generative enterprise, it was a pricey market darling at a price/earnings ratio of 64. Since the end of 2021, its market value has halved as hedge funds shorted the shares.
Even so, its top line has compounded at 17 per cent annually since 2018. Operating profit margins have expanded by 630 basis points. It has managed this without any net debt.
That trend looks set to continue. Analyst forecasts collated on the Visible Alpha website point to a 21 per cent margin in three years’ time. Moreover, YouGov’s €315mn (£272mn) acquisition of a consumer panel business from Germany’s GfK should help it expand in the fast-moving consumer goods category. The deal should close in the coming months, topping up revenues by more than £115mn and adding to profitability.
What’s not to like? The highest share turnover in two years suggests that more than one wavering bear has been asking that question.
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