YouGov boasts that it can dig up public opinion about “anything and everything”, from Prince Harry or Abba to Phillip Schofield or Denzel Washington. It has found that the most popular UK retail brand is Lego while in the US it is Band-Aid, and reckons that half of Britons are happy but more than a third are stressed.
Awareness of the company was historically based on its general election polling, but in recent years it has used that expertise to become a more broadly based data analytics business. Increasingly the key factor is YouGov’s international panel of more than 20 million people who sign up to answer whatever questions it fires at them, backed by its Crunch analytics database, in what it regards as a continuous conversation. The firm wants to be “the world’s leading provider of marketing and opinion data”. The YouGov Platform enables customers to serve themselves by grazing the fields of information.
This means that it is more highly geared to economic activity than in the early days, when political opinion was its bread and butter. If corporate clients, who include The Times, have no plans, they have no reason to ask questions. The more projects they are considering, the more they want to know. Elections are still important to that process. In August YouGov’s co-founder, Stephan Shakespeare, steps down as chief executive in favour of Steve Hatch from Meta, Facebook’s parent, and his sales and marketing skills are expected to leverage the product range that Shakespeare developed. While the company has offices in 25 countries, it has not attacked the US or China and there are gaps in Europe.
With no dominant shareholders, a maturing firm such as YouGov should be coming on to the radar of predators. They would normally include such global data-gobblers as Meta, Microsoft, Apple, Amazon and Alphabet, except most of these are YouGov customers and if one became its owner the others might go elsewhere. Its great strength is independence, so any bidder would have to reckon with industry rivals melting away as customers, as they would be more reluctant to share sensitive information. But YouGov is building a business model that may become sufficiently attractive to be worth taking that hit.
When this column last looked at YouGov, in early January 2020, it fortuitously advised investors to avoid the shares just before they suffered the widespread Covid plunge, which cut the price by 205p to 450p. The shares recovered to a peak of £16 at the end of 2021, since when they have been languishing, dipping below 800p last October under the impact of the economic slowdown and the realisation that there would not be another general election until 2024. But there has been a revival in recent months.
Interim results in March showed revenue rising 30 per cent year-on-year to £131 million, taking adjusted operating profit up 58 per cent to £22.1 million, a 32 per cent rise after excluding the effects of acquisitions and currency movements. The overall operating margin rose three percentage points to 17 per cent. Investment in technology, people and panellists is starting to pay off and should help to meet revenue forecasts of £265 million turning into £56 million in pre-tax profits for the year ending next month. The joint house broker Numis sees those numbers rising to £299 million and £64.1 million next year, leading to 43p earnings per share and a 24.9 price-to-earnings ratio.
YouGov held a capital markets day last month that emphasised its ability to scale up. That persuaded Robert Chantry, an analyst at the other joint house broker, Berenberg, to aim at a £16.40 share price target. The company is aiming to achieve annual revenues of £500 million and earnings margins of 25 per cent in the next three to five years, which to Chantry offers “significant profitability upside”. Just don’t look to the shares to pay your bus fare. The dividend yield is a miserly 0.71 per cent, possibly struggling to 1 per cent in the next two years.
ADVICE Buy
WHY Long-term potential is only now beginning to land on the bottom line
Carnival
This column advised avoiding Carnival last June at 761p, since when the shares have yo-yo’d around that price and are now 905p after hitting a low of 508p last November. But we did say it was worth waiting to see how 2023 panned out. So is it time to get in, now that Covid has lost its sting and many of us are looking to get away?
Listed in London and New York, Carnival Corporation & plc is the largest global cruise company, and among the biggest leisure travel companies, sailing under names including Carnival Cruise Line, Cunard, Holland America Line, P&O Cruises, Princess Cruises and Seabourn. It has no connection with P&O Ferries.
Its market position means that the shares are a convenient proxy for the cruise trade, and even the international leisure industry, both of which are picking up. Long airport queues have encouraged many people to spend holidays afloat.
Last year the group broke ground on a new exclusive destination, Grand Bahama Port. In the three months to the end of February, ticket sales jumped $2 billion to $2.8 billion, while onboard purchases doubled to $1.5 billion.
After operating expenses this produced a $3.3 billion profit, up from $2 billion a year ago. But below-the-line costs ate all that and more, leaving a $693 million net loss, $1.2 billion lower than the same time last year. Half-year numbers, due on June 23, should confirm the recovery trend.
The shares were buoyed this week by news that Carnival’s Adora Magic City left Shanghai for final testing and internal decoration. It will be the world’s first 5G-enabled cruise ship and points to a significant step up in profitability.
It also marks the arrival of China as the fifth country capable of building large liners, after Germany, France, Italy and Finland. That will increase the bargaining power of the cruise operators.
ADVICE Buy
WHY Choppy ride in prospect, but heading in right direction
