Which Of These Public Market Research Companies Are You Going To Buy Stock In?
Recently I was reading a chart with US Public Market Research Companies and their 2007 results vs. their 2006 performance. Here are the results:
| Arbitron | -4.3% |
| Brainjuicer | +8.2 |
| Comscore | +45.6 |
| Confirmit | +5.3 |
| GFK Group | -16.7 |
| Greenfield Online | +.2.2 |
| Harris Interactive | -15.5 |
| IMS Health | -16.2 |
| Intage Inc | -8.7 |
| Ipsos Group | -28.7 |
| Macromill | -50.7 |
| National Research Corp | +18.9 |
| Research Now PLC. | -25.7 |
| Taylor Nelson Sofres PLC | +3.2 |
| Toluna PLC | -10.1 |
| YOUGOV LTD | -34.2 |
See a trend? Of the sixteen companies, six had an increase from 2006. Only two of those companies had double digit increase in their stock price. Of the ten companies whose stock price went down in 2007, eight of them lost over 10%. That to me was pretty amazing. Based on this graph there are lots of questions:
- What is going on?
- Will this trend continue?
- Once you get to a certain level, can you really grow the company to have success year over year?
- Is this an opportunity to buy a stock at a good value?
What do you think? What does this graph tell you about our industry?
I look forward to reading your comments.
April 21st, 2008 at 9:42 am
I wonder if those that increased are primarly conducting internet research? Just curious..
By the way I love you e-mails!
Thanks Much,
Bonnie
April 21st, 2008 at 10:20 am
I was wondering the same thing as Bonnie, but I see several Internet based companies that have dropped in value. Of course there are any number of reasons that stock may go up or down.
I suspect that the key here is innovation and adaptation to the changing culture and business market, mainly as a result of the Internet.
I believe that the same thing happened about 100 years ago to the wagon companies who failed to adapt or tried to adapt to the emerging automobile market. I have an old magazine with an ad for the “Orient Buckboard” truck, which was basically a buckboard wagon with a gas engine attached to the back. You can guess what happened to Orient Wagon Works stock when Henry Ford came along.
Another old ad is for the Waterloo Wagon Works. They converted to making auto bodies and survived until the 1930s, were bought out by Campbell who continued to make wooden car and truck bodies until the 60s.
So, I wonder, how many of us are merely putting Internet engines onto our traditional Market Research wagons, and how many of us are creating our own Model Ts for the new market?
April 21st, 2008 at 10:38 am
2006 is a long time ago… It would be interesting to see 2006 to 2007 trending to really understand this. Some of these firms, such as Research Now, may have had heavy investment in 2006. Kind of tough to speculate on this in a vacuum.
April 21st, 2008 at 12:14 pm
Lynn,
This list is actually 2007 results (stock performance) vs 2006 so it is exactly what you wanted - sorry if I wasn’t more clear.
Merrill
April 22nd, 2008 at 1:10 pm
I just came back from the New York,Philly joint conference in Philadelphia. What a difference from say 10 years ago. A room filled with many different types of firms, mostly electronics and companies like Dell and IBM. On line services and sampling companies as opposed to small data collection and focus groups owners. Times are changing. Our industry is changing, lots of young people are getting turned on to opportunities that are there for them now. It was wonderful to see the enthusiasm. The old timers like me have to find our own nitch, and thank goodness we have found ours. We have to think positive and really research everything we do very carefully, in these times we can’t afford to make mistakes. We have to go with the times otherwise we will wind up as a statistic or make the losers list.
April 28th, 2008 at 2:44 pm
I might have a different perspective. I left Synovate last year. It was being driven to a commoditization strategy of “faster, better, cheaper”. Clients do not see added value coming from a lot of their investments in market research. Everyone wants cheap web research.
A fundamental problem is that research goes to researchers in organizations not to those making business decisions. Researchers have not found a way to get around their gate-keepers so their work can be aimed at issues that are a priority to business leaders - and can be addressed in business cycle time, and not research cycle time.
Research will always be done, and research budgets will always exist - but both will continue to erode. In addition, the need for researchers to be excessively detailed in their work means that they will continue to put the same effort into shrinking budgets. These factors will merge to lower revenues and margins.
There are ways out, but it will be painful.
Thanks for the opportunity.
May 15th, 2008 at 1:37 pm
GfK Achieves ‘Sound’ First Quarter Figures May 15 2008
GfK has described its Q1 results as ‘sound’, with organic growth in sales up 5.1% to €268.1m and consolidated total income rising almost 21% to €12.5m.
Acquisitions contributed 2.2% to growth, while currency effects arising mainly from the revaluation of the Euro against the US dollar, reduced sales by 4.7%. With these two factors, reported sales increased by 2.6%.
For the first three months, operating income was up 3.9% to €20.9m, and adjusted operating income was €23.0m, compared with €24.8m, a figure which GfK puts down to ‘seasonal effects’.
The firm says its order books at the end of April were ‘excellent’, with 61.8% of expected sales for the year 2008 already posted – this compares with 60.6% a year ago.
Since the beginning of this year, the GfK Group has refocused its organizational structure on the three sectors of Custom Research, Retail and Technology, and Media. All sectors achieved organic growth in sales compared with the same period in the prior year.
Compared with Q1 2007, the Custom Research sector saw organic sales growth of 2.6%, with the acquisitions ofBlue Moon in Australia and Bilesim International in Turkey boosting growth by a further 2.7%. Currency effects reduced sales by 5.4%, and income amounted to €5.6m representing a decrease of €3.2m on the same quarter the prior year.
Retail & Technology achieved a sales increase of 11.4% to €63.5m, generated exclusively by organic sales growth. Acquisitions made a 2.0% contribution to sales growth, while currency effects reduced sales by 2.1%.Income rose 13.3% to €12.7m. At 20.0%, the division managed the highest margin of all the sectors.
The Media team achieved 8.0% organic growth in sales, although currency effects reduced sales by 5.8%, with the division consequently achieving an increase in sales totalling 2.2% to €30.2m. Income was €5.4m, which was almost at the prior year’s level of €5.6m.
GfK also achieved significant double-digit growth in organic terms in Central and Eastern Europe, Latin America as well as Asia and the Pacific.
Given the current merger discussions with TNS the firm says it is not confirming, restating or updating the sector targets or certain other forward-looking statements published in its 2007 Annual Report.
However, on the strength of its portfolio, GfK is confident that it will perform well, even in the face of the slowdown in the global economy, and expects to increase sales in the financial year by more than 5.5% on an organic basis.
Web site: http://www.gfk.com .
May 15th, 2008 at 1:39 pm
Ipsos Growth ‘Better Than Anticipated’ May 15 2008
Ipsos first quarter revenues rose 6.2% to €217.3m from Q1 2007. Despite slow going in North America, global organic growth reached 9.6%, which the firm said exceeded its full-year targets.
Currency effects had a negative impact of 6.4%. Consolidation effects had an impact of 3% on first quarter 2008 revenues owing to the consolidation of Eureka, Indica Research, Markinor, ResearchPartner, and Forward Research. The acquisition of Monroe Mendelsohn, which now operates under the Ipsos Mendelsohn brand, will be consolidated from 1 April 2008.
Regionally, North America recorded slow growth, while Europe continued the recovery it began in 2007, and growth exceeded 10% in the Asia-Pacific zone.
Consolidated revenues
by geographic area
(millions of euros)
Q1 2008 Q1 2007 %
change
Organic growth
Europe 111.9 100.6 11.3% 13%
North America 64.9 67.8 (4.3%) 2.75%
Latin America 20.7 17.9 15.5% 19%
Asia-Pacific / Middle East 19.8 18.4 7.9% 7.5
Quarterly revenues 217.3 204.7 6.2% 9.6%
Ipsos ASI – the division specialising in advertising research – recorded double-digit organic growth, while success in Ipsos Public Affairs was driven by the elections in France, Italy and Spain. The firm saw ‘excellent performance’ in corporate and social research in North America and the UK.
Ipsos MediaCT, the new division which specialises in researching the converging media, content, telecoms and technology industries, continued to roll out its operations. Lastly, Ipsos Loyalty (quality and client relationship management) recorded a good first quarter in line with previous quarters.
Consolidated revenues
by business line
(millions of euros)
Q1 2008 Q1 2007 %
change
Organic growth
Advertising Research 48.5 45.5 6.7% 11%
Marketing Research 98.9 96.6 2.3% 7% *
Media Research 16.1 13.7 16.9% 3% *
Opinion and Social Research 34.6 29.8 16.5% 22%
Customer Relationship Management 19.2 19.1 0.4% 9%
Quarterly revenues 217.3 204.7 6.2% 9.6%
At the end of April, Ipsos’ order backlog was more than 10% higher (excluding currency and consolidation effects) than its level at the same point in 2007.
The firm’s management reiterated its 2008 objectives of achieving organic growth of at least 8%, revenues of more than €1bn and $1.5bn, and an improvement in its operating margin.
May 15th, 2008 at 1:51 pm
Third Quarter Disappoints Harris May 2 2008
Harris Interactive has reported third quarter fiscal 2008 results showing consolidated revenue up 11% to $57.3m, with a very good performance from newly acquired companies in Asia, France, Canada and Germany. However, due to declines in the US and UK, consolidated pro forma organic revenue dropped 4%.
President and CEO Greg Novak said that while the firm is disappointed with the overall figures, the result primarily of revenue shortfalls in its US healthcare business, it was encouraged by the solid organic growth seen in many of the firm’s business groups. Organic revenue in the acquired companies was up 26% to $11.7m.
Operating loss was $1.9m, compared with operating income of $1.4m reported for the same period last year. The net loss for the quarter was $2.1m compared with net income of $1.2m for the third quarter of fiscal 2007. ‘Lower than anticipated revenue, higher fixed costs, $1.9m in charges related to cost-reduction actions, an increased effective tax rate and higher interest expenses all added up to a loss in the quarter,’ explained CFO Ronald Salluzzo. He added that the firm has now taken steps which will save approximately $9m of costs in FY09.
Bookings were up 7% to $61.3m, although while North American bookings increased 17%, European bookings were down 20%. Salluzzo says the firm is now seeing ‘very solid’ bookings in the UK, which when combined with expected strong performances from France and Germany, should improve this measure for the fiscal fourth quarter.
Year-to-date revenue increased 13% to $175.2m. However, on a year-to-date basis, pro forma organic revenue growth in Asia, Europe and a number of North American business units was not enough to offset the substantial revenue decline in the US healthcare business.
Operating income for the fiscal-year-to-date was $3.1m, down 62% and net income was $1.0m, down 82% when compared with the same period in fiscal 2007.
Novak commented that the firm has now resized the business to match the revenue outlook and installed new leadership in its US healthcare business to position it for future growth and profitability. Despite this, he added that revenue growth in healthcare research is unlikely to return until 2009.
The firm is now projecting revenue of between $237m and $240m, adjusted EBITDA of between $17m and $19m, and fully diluted EPS of between $0.01 and $0.03.