SThree - more upgraded expectations says Cenkos Securities
Another example of the dislocation between underlying trading and what the stock market is pricing in.
SThree’s Q3/22 update revealed group NFI +19% (against a very strong comparative), with Contract NFI +21% and Permanent +10%.
The group yet again upgraded market expectations, with PBT for the FY22 expected to be at least 7% ahead of consensus.
Productivity continues to be at exceptional levels (+5% YoY in Q3/22), albeit this is expected to reduce as headcount continues to expand.
Overall, another recruitment business delivering strong results with no discernible evidence of a significant slowdown in activity levels – perhaps underlying structural shifts will insulate these stocks more in the event of a downturn?
The shares trade on 9x FY23E PE, 5x EV/EBITDA and c4% yield (based on Factset consensus).
Source: Cenkos Securities