The reassuring Q4 trading update capped off a positive run for SThree. The share price has responded to a combination of a well-received Capital Markets Day and a post-election peer group rally. The trading commentary around Q4 and FY2019 shows a group continuing to outperform in its key international growth markets. The tone around Q4 exit momentum was cautiously optimistic; especially in Continental Europe and USA. UK & Ireland remain challenging but there is a growing sense the macro sentiment backdrop may now ease off. We discuss the Capital Markets Day in more detail in this note but the key themes revolved around the long terms structural trends that SThree has positioned itself to take advantage of; the relevance of the SThree business model (both revenue and economics) and overall growth ambitions and strategy looking forward to FY2024. Even after a strong run in the share price; SThree continues to trade at a material (25%) PE discount to the peer group. The peer group has re-rated upwards sharply despite a deteriorating EPS estimate trend. Based on current consensus; SThree is now expected to outgrow the UK peer group in FY2020.
18 Dec 2019
Q4 trading update – Resilient model, outperforming
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Q4 trading update – Resilient model, outperforming
SThree plc (STEM:LON) | 426 12.8 0.7% | Mkt Cap: 574.9m
- Published:
18 Dec 2019 -
Author:
Iain Daly -
Pages:
15
The reassuring Q4 trading update capped off a positive run for SThree. The share price has responded to a combination of a well-received Capital Markets Day and a post-election peer group rally. The trading commentary around Q4 and FY2019 shows a group continuing to outperform in its key international growth markets. The tone around Q4 exit momentum was cautiously optimistic; especially in Continental Europe and USA. UK & Ireland remain challenging but there is a growing sense the macro sentiment backdrop may now ease off. We discuss the Capital Markets Day in more detail in this note but the key themes revolved around the long terms structural trends that SThree has positioned itself to take advantage of; the relevance of the SThree business model (both revenue and economics) and overall growth ambitions and strategy looking forward to FY2024. Even after a strong run in the share price; SThree continues to trade at a material (25%) PE discount to the peer group. The peer group has re-rated upwards sharply despite a deteriorating EPS estimate trend. Based on current consensus; SThree is now expected to outgrow the UK peer group in FY2020.