In amongst the gloom, the SThree Q4 trading update was a reassuring piece of good news with the company flagging a strong end to FY18 and an outcome above the top end of expectations. The departure of the CEO, Gary Elden, was a surprise but on the flip side; new leadership will create new opportunities for a group with considerable global reach, scale and management depth. So where is the valuation now, following a poor month for cyclical equities in general? On our revised estimates, SThree now trades on a FY18 PE of 9.5x, falling to 8.6x for FY19E. The dividend yield is 5.1%, covered more than 2.0x. Based on market consensus, SThree trades at a 24% PE discount to the immediate peer group. Given the positive trading commentary and the strong start to FY19E, any potential bad news looks more than baked into the share price.
20 Dec 2018
Q4 update – Not all doom and gloom
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Q4 update – Not all doom and gloom
SThree plc (STEM:LON) | 432 21.6 1.2% | Mkt Cap: 582.6m
- Published:
20 Dec 2018 -
Author:
Iain Daly -
Pages:
7
In amongst the gloom, the SThree Q4 trading update was a reassuring piece of good news with the company flagging a strong end to FY18 and an outcome above the top end of expectations. The departure of the CEO, Gary Elden, was a surprise but on the flip side; new leadership will create new opportunities for a group with considerable global reach, scale and management depth. So where is the valuation now, following a poor month for cyclical equities in general? On our revised estimates, SThree now trades on a FY18 PE of 9.5x, falling to 8.6x for FY19E. The dividend yield is 5.1%, covered more than 2.0x. Based on market consensus, SThree trades at a 24% PE discount to the immediate peer group. Given the positive trading commentary and the strong start to FY19E, any potential bad news looks more than baked into the share price.