Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Staffline will fall a little short of its target of £1bn in revenues for 2018

Although results should be "in line", the recruiter will fall some £40mln shy of its ambition to clock up £1bn in annual revenues
Meeting room
The group said it achieved excellent growth in the number of "OnSites" this year

Recruitment and welfare-to-work specialist Staffline Group PLC (LON:STAF) said results for the year just ended were in line with market expectations.

Revenues will be slightly below the group's £1bn target but should be some 9% above 2016's £882.4mln.

Demand in the staffing division remained strong through the second half. PeoplePlus, the employability, skills and justice division, has also made good progress, Staffline said, continuing to win new contracts as well as benefiting from its focus on improved margins, helping to offset reduced activity from the run-off of the Work Programme.

Broker comment

Broker finnCap said it would be making no changes to its forecasts on the back of Wednesday's announcement, and reiterated its 'buy' recommendation.

“With a 2017 P/E of only 8.7x, Staffline is valued at the lower end of both the recruitment sector (average 2017 P/E12.4x) and the outsourcing sector (average 2017 P/E 15.1x). The group’s strong growth track record to date and balance sheet suggest a combination of future contract wins and/or investment in growth through acquisitions are likely to surprise on the upside against the share price’s very modest expectations,” finnCap's Guy Hewett said.

House broker Liberum said it was a “reassuring trading statement”.

It is forecasting £950mln in revenues for 2017, which equates to 8% year-on-year growth, which is a little below the “circa 9%” indicated in Staffline's statement.

“At Staffing, we continue to expect 11% growth in the number of OnSites from 357 in FY 2016 to 395. At PeoplePlus, the business continues to win new contracts, like the Scottish equivalent of Work and Health, and margins are benefiting from cost savings. There is no comment on the financial position, and we maintain our FY net debt estimate of £18m or 0.4x EBITDA. We expect management to set out their growth plans at the FY results on 24th January,” said Liberum's Joe Brent.

Not surprisingly, the house broker rates the shares as a 'buy', saying that a projected price/earnings (P/E) ratio of 8.8 based on its 2018 earnings forecast is “attractive given the track record of growth”.

Shares in Staffline fell 1.5% to 995p on the trading update.

View full STAF profile View Profile

Staffline Timeline

Related Articles

The river Thames
June 08 2018
No longer focused so much on drone technology, the high-tech survey and inspection specialist is so changed that it probably should change its name but management would rather spend the money growing the business
drill rig
June 18 2018
The last few months have seen an increase in demand for exploration rigs, which will benefit Capital Drilling's utilisation rates from this segment of the market - chairman Jamie Boynton
credit cards
July 08 2018
The group is already seeing good progress at its US contact centre business

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use