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Here’s one big thing I think could drive this share higher

International data and analytics company YouGov (LSE: YOU) has been a great success on the stock market, and I reckon there could be much more to come for shareholders because of one compelling item mentioned in today’s half-year report.

An impressive financial record

Over the past three years, the share price has risen around 250% driven by an increase in revenue close to 50%, a surge in normalised earnings of almost 400%, and an increase in the dividend near 150%. YouGov has been trading and growing well, and there’s more good news today. In the six months to 31 January, revenue lifted 18% compared to the equivalent period last year and adjusted earnings per share shot up by 33%.

The trading success shows up on the balance sheet too, with the net cash balance rising more than 17% compared to the year before, to £25m. YouGov doesn’t currently pay an interim dividend but last year’s full-year payment rose 50%, and I’m expecting a further advance at the end of the current trading year.

The strategy involves developing and launching new products across all the firm’s “existing geographies.” The company operates with 34 offices in 22 countries and has panel members in 38 countries. As well as organic growth, bolt-on acquisitions help YouGov achieve its goal, typically to gain access to niche areas of the market.

Big in America

In the period, adjusted operating profit from the USA rose 15%, and around 45% of overall operating profit originated there, making the geography “the largest driver” of profits. Chief executive Stephen Shakespeare said in the report that the company is in the final year of its five-year growth plan, which is delivering revenue and earnings “ahead of the market.” He said the firm’s syndicated data model “has broken new ground in the industry.”

The company’s next five-year plan focuses on activating data to create “targetable audiences,” investing in technology to integrate and customise data, and opening up some of the firm’s data as a public resource. Shakespeare explained the strategy aims to help create a universal data platform for the company’s clients. The ambition is to become “the world’s leading supplier of proprietary panel data.”

Ambitious goals and incentivised management

One big thing in today’s report that I think looks set to drive the shares higher in the coming years is the Long-Term Incentive Plan (LTIP) for senior management. In an ideal world, directors and other senior managers in any company will collect their fat salaries and do the best job they can anyway, with drive, determination, enthusiasm and great ability. But in the real corporate world of today, if managers can see a clear path to leveraging their returns they will likely be switched on all the more to try to achieve the goals that will deliver more income from their salaries and bonuses.

The LTIP targets require the doubling of group revenue and adjusted operating profit margin by 2023, and achieving a compound annual growth rate in adjusted earnings per share “in excess of 30%.” If the firm can achieve those goals, I reckon shareholders will see decent total returns from where we are now.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.