Stock specific factors drive Staffline and Harvey Nash - City Comment
9 May 2013
During April staffing stocks fell 0.5%, whereas equity markets moved 1%-2% higher. Given the sector is up 29% so far this year it is hardly surprising that some of the staffers are pausing for breath.
Thu, 9 May 2013 | By Adrian Kearsey, equity analyst, Hardman & CoDuring April staffing stocks fell 0.5%, whereas equity markets moved 1%-2% higher. Given the sector is up 29% so far this year it is hardly surprising that some of the staffers are pausing for breath.
That said, certain agencies continue to see their share prices move higher, driven by positive news flow and attractive valuations. Two notable (current) outperformers are Staffline and Harvey Nash.
Staffline has seen its share price almost double during the last 12 months. However, the shares still managed to move 6% higher in April. Investors are increasingly attracted by the operational gains being achieved. The company is progressing well with its OnSite platform, last year adding 16 sites bringing the total to 179.
The company appears to be successfully delivering on its welfare-to-work contract and is actively seeking additional opportunities within this area. Given that certain welfare-to-work providers are struggling to deliver on service levels, there is clearly scope to pick up business here.
Finally management are upbeat on driving medium-term growth, looking to treble the size of the business over the next five years. Usually investors run for the hills when chief executives make such predictions.
However, Andy Hogarth (pictured left), Staffline’s chief executive officer, is quite detailed on how the company aims to achieve this growth and they have achieved this growth before. All this and the shares are only trading on a forward price earnings multiple of 11x, half that of the three large UK staffing agencies (Hays, Michael Page and SThree).
Harvey Nash has similarly seen its share price increase 45% over the last 12 months. Over the last month the shares are up 9%.
On 30 April, Harvey Nash delivered a strong set of FY2013 results. Net fee income (NFI) was up 6%, driven by healthy performances in the UK (NFI +9%), Benelux (+17%) and the Rest of the World division (+27%). Across many territories there is a renewed interest in offshoring services, especially within the technology market.
The UK offshore business at Harvey Nash increased NFI by 30% during the year. This trend is helping drive its Asia-Pacific operations. The relatively new Hong Kong and Singapore offices are continuing to increase consultant headcount and management hope these recent start-ups will move into profit during the current year.
Harvey Nash is also investing in Vietnam and has entered into a joint venture with Mitsui and WPP to deliver business process outsourcing services. This venture should help drive inward business from Japan and indeed other developed markets. In terms of valuation, the shares are even cheaper than Staffline, trading on a forward price earnings multiple of 9x.
That said, certain agencies continue to see their share prices move higher, driven by positive news flow and attractive valuations. Two notable (current) outperformers are Staffline and Harvey Nash.
Staffline has seen its share price almost double during the last 12 months. However, the shares still managed to move 6% higher in April. Investors are increasingly attracted by the operational gains being achieved. The company is progressing well with its OnSite platform, last year adding 16 sites bringing the total to 179.
The company appears to be successfully delivering on its welfare-to-work contract and is actively seeking additional opportunities within this area. Given that certain welfare-to-work providers are struggling to deliver on service levels, there is clearly scope to pick up business here.
Finally management are upbeat on driving medium-term growth, looking to treble the size of the business over the next five years. Usually investors run for the hills when chief executives make such predictions.
However, Andy Hogarth (pictured left), Staffline’s chief executive officer, is quite detailed on how the company aims to achieve this growth and they have achieved this growth before. All this and the shares are only trading on a forward price earnings multiple of 11x, half that of the three large UK staffing agencies (Hays, Michael Page and SThree).
Harvey Nash has similarly seen its share price increase 45% over the last 12 months. Over the last month the shares are up 9%.
On 30 April, Harvey Nash delivered a strong set of FY2013 results. Net fee income (NFI) was up 6%, driven by healthy performances in the UK (NFI +9%), Benelux (+17%) and the Rest of the World division (+27%). Across many territories there is a renewed interest in offshoring services, especially within the technology market.
The UK offshore business at Harvey Nash increased NFI by 30% during the year. This trend is helping drive its Asia-Pacific operations. The relatively new Hong Kong and Singapore offices are continuing to increase consultant headcount and management hope these recent start-ups will move into profit during the current year.
Harvey Nash is also investing in Vietnam and has entered into a joint venture with Mitsui and WPP to deliver business process outsourcing services. This venture should help drive inward business from Japan and indeed other developed markets. In terms of valuation, the shares are even cheaper than Staffline, trading on a forward price earnings multiple of 9x.
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