The final results did not contain any surprises but did provide more colour around the trading outlook. The strong exit momentum was confirmed; especially in key overseas markets, which helps to underpin H1 visibility. However, despite positive momentum heading into 2019, SThree is having to contest with poor macro data coming out of the Eurozone, and Germany in particular. Past experience suggests SThree’s unique combination of STEM and Contract focus should hold it in relative good stead. SThree has been subject to a Bull/Bear tug of war since the start of Q4 2018. Although SThree is still some way off its recent highs, it is now also some way off its lows, suggesting the more extreme cyclical concerns have now been priced in. The return of SThree to dividend growth is also a positive catalyst. SThree continues to trade at a material discount to the Staffing peer group (FY19E PE of 9.4x, 5% yield) despite strong operational performance and late cycle attractions.
15 Feb 2019
Business model resilience against an uncertain outlook
Sign up for free to access
Get access to the latest equity research in real-time from 12 commissioned providers.
Get access to the latest equity research in real-time from 12 commissioned providers.
Business model resilience against an uncertain outlook
SThree plc (STEM:LON) | 426 6.4 0.4% | Mkt Cap: 574.6m
- Published:
15 Feb 2019 -
Author:
Iain Daly -
Pages:
10
The final results did not contain any surprises but did provide more colour around the trading outlook. The strong exit momentum was confirmed; especially in key overseas markets, which helps to underpin H1 visibility. However, despite positive momentum heading into 2019, SThree is having to contest with poor macro data coming out of the Eurozone, and Germany in particular. Past experience suggests SThree’s unique combination of STEM and Contract focus should hold it in relative good stead. SThree has been subject to a Bull/Bear tug of war since the start of Q4 2018. Although SThree is still some way off its recent highs, it is now also some way off its lows, suggesting the more extreme cyclical concerns have now been priced in. The return of SThree to dividend growth is also a positive catalyst. SThree continues to trade at a material discount to the Staffing peer group (FY19E PE of 9.4x, 5% yield) despite strong operational performance and late cycle attractions.