Good analysis. Have followed yougov for a bit and now opened a mid sized position at my end. Average price of 403p. To me it seems that CPS was not a great acquisition. They paid >300m for the business and seems like the revenue is below 135m that they said in the initial strategic rationale announcement and the operating profit would show multiple well into double digits. The research and data products on an operating profit basis have both struggled and the CEO is now gone. I am now down 15%, not helped recently by RNS saying "low single digit" growth which I think means that underlying profitability is still going down. Overall, think the business is fairly priced so will hold onto see how it develops over the next 12-24 months. Any latest thoughts from you as you have clearly done a deep dive into the company?
My average purchase price is 8 pounds being a major position in my portfolio. So I don't know if my opinion is very valuable right now :).
If you have bought at 4 pound I think it has a lot of upside potential whereas the downside is more limited right now. Until they hire the new CEO and it has decent results in the next few quarters I think the stock will not recover. I agree that it takes 12-24 months to see the stock back above 7 pounds.
A good deal would be for the company to be taken over by private equity and realise the gain quickly.
As a lesson learnt on my part I consider this market to be changeable and it is not easy to understand the drivers that govern it. The barriers to entry are low although the brand and trust of the company is a competitive advantage.
I think the last CEO departure makes sense. Oversaw a large acquisition that has not delivered and the underlying business has significantly gone backwards in the mean time. Having said that, current enterprise value is around 550m against last reported operating profit of 49m means 11x operating profit which doesn't seem cheap to me BUT if they can hold onto 49m and then deliver the 20m of cost savings that they have been talking about it starts looking cheap. Really depends on stability of 49m operating profit and success in delivering 20m of cost savings. Any sustained growth in underlying business would then be cherry on top. Just my view but appreciating to say that markets are brutal (especially aim and mid caps) so this may decline another 50-75 percent! What do I know!!!
Yes, surprisingly, operating profit growth expectations have been ~40% lower than the estimates I had made for this FY24. This has knocked the share price to the floor, now YouGov can be bought at the 2018 price.
Personally I do not use stop-loss as I invest for the medium to long term.
Thanks for the write-up. Why after a successful track record is the stock where it was ~4 years ago/the stock has nearly halved since the end of 2021? Why does the market not like them anymore?
Several points here, the most important being that in September 2021 the company was trading at 64x P/E levels. That is excessive, a bubble.
What the share price has done in recent years is to ‘drain’ this excess, so it has hardly had any return (it came from a bubble price). Now the PE is lower than at the worst of the Covid.
On the other hand, investors are putting a lot of focus on the Magnificent 7 and IA and SME's remain neglected despite being attractively priced for years.
The last factor is that the UK market is one of the cheapest markets in Europe right now to invest in, as is the Italian market.
I hope I have been able to answer your question. Regards.
You can easily find it in the company's FY reports. Search for "Number of shares".
I also use Tikr which in this case is correct.
The latest FY23 data are 109.6 (basic) and 112.1 (diluted).
Thanks mate. I appreciate the high quality write up
Thank you very much for the feedback!
Good analysis. Have followed yougov for a bit and now opened a mid sized position at my end. Average price of 403p. To me it seems that CPS was not a great acquisition. They paid >300m for the business and seems like the revenue is below 135m that they said in the initial strategic rationale announcement and the operating profit would show multiple well into double digits. The research and data products on an operating profit basis have both struggled and the CEO is now gone. I am now down 15%, not helped recently by RNS saying "low single digit" growth which I think means that underlying profitability is still going down. Overall, think the business is fairly priced so will hold onto see how it develops over the next 12-24 months. Any latest thoughts from you as you have clearly done a deep dive into the company?
Hey Varun, thank for your comments.
My average purchase price is 8 pounds being a major position in my portfolio. So I don't know if my opinion is very valuable right now :).
If you have bought at 4 pound I think it has a lot of upside potential whereas the downside is more limited right now. Until they hire the new CEO and it has decent results in the next few quarters I think the stock will not recover. I agree that it takes 12-24 months to see the stock back above 7 pounds.
A good deal would be for the company to be taken over by private equity and realise the gain quickly.
As a lesson learnt on my part I consider this market to be changeable and it is not easy to understand the drivers that govern it. The barriers to entry are low although the brand and trust of the company is a competitive advantage.
I think the last CEO departure makes sense. Oversaw a large acquisition that has not delivered and the underlying business has significantly gone backwards in the mean time. Having said that, current enterprise value is around 550m against last reported operating profit of 49m means 11x operating profit which doesn't seem cheap to me BUT if they can hold onto 49m and then deliver the 20m of cost savings that they have been talking about it starts looking cheap. Really depends on stability of 49m operating profit and success in delivering 20m of cost savings. Any sustained growth in underlying business would then be cherry on top. Just my view but appreciating to say that markets are brutal (especially aim and mid caps) so this may decline another 50-75 percent! What do I know!!!
Wasn't the acquisition closed before he came aboard?
Today -45% drop after today trading update to a long-term low. O.O
Do you secure such holdings with stop-loss?
Yes, surprisingly, operating profit growth expectations have been ~40% lower than the estimates I had made for this FY24. This has knocked the share price to the floor, now YouGov can be bought at the 2018 price.
Personally I do not use stop-loss as I invest for the medium to long term.
Thanks for the write-up. Why after a successful track record is the stock where it was ~4 years ago/the stock has nearly halved since the end of 2021? Why does the market not like them anymore?
Several points here, the most important being that in September 2021 the company was trading at 64x P/E levels. That is excessive, a bubble.
What the share price has done in recent years is to ‘drain’ this excess, so it has hardly had any return (it came from a bubble price). Now the PE is lower than at the worst of the Covid.
On the other hand, investors are putting a lot of focus on the Magnificent 7 and IA and SME's remain neglected despite being attractively priced for years.
The last factor is that the UK market is one of the cheapest markets in Europe right now to invest in, as is the Italian market.
I hope I have been able to answer your question. Regards.
Could you point to source that shows their basic & diluted average share count for the last 5 years?
Hey South Sea, I was extracted from company reports.