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  • Writer's pictureMark Watson-Mitchell

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

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