PageGroup (GB:PAGE) announced impressive interim results for the period ending June 30, 2022, driven by a hot job market – revenues leapt by 27.5% to £977.3 million, and gross profit increased by 33% to £538.9 million.
This was driven by higher wages, asupply imbalance of employees and remote interview process leading to quicker turnarounds at the interview stage.
But management warned about a slowdown in hiring in some of its markets in July 2022 – hinting that the inflation crisis may have an impact in future months.
Thanks to such cautionary statements, the shares fell by 9% on Monday. The stock is trading down by 25% in the last year. The shares have been on a downward trend since March 2022, when the company warned of a slowdown in hiring due to the broader economy.
PageGroup provides recruitment consultancy services for different levels of hiring, including brands such as PageExecutive, MichaelPage, PageOutsourcing, and more.
The numbers game
The highlight of the results was its operating profits, which increased by around 80% to £115 million. The company’s strategy to invest in its platform and technology during the pandemic paid off well. The company believes it is on track for 2022 operating profit to be in line with expectations at £206 million.
The company didn’t forget about shareholders, either. It announced an interim dividend of 4.91p per share, which is 4.5% higher than in 2021. It also announced a special dividend of 26.71p per share in line with its policy.
PageGroup has an attractive dividend yield of 9.24% against the sector average of 0.54%.
View from the City
According to TipRanks’ analyst rating consensus, PageGroup stock has a Strong Buy rating. The stock has ratings from four analysts, out of which, three are Buy and one is Hold.
The average price target is 580p with an upside potential of 38%. The analyst price targets range from a low of 510p to a high of 610p.
Last month, Anvesh Agrawal from Morgan Stanley upgraded his rating on the stock with a target price of 510p. He believes “value is starting to emerge for the staffing companies.”
He has a 100% success rate on this stock with an average return of 25.6% per rating.
Conclusion
The expected slowdown in hiring does pose some challenges for the company. However, its diversification among different markets and different job levels makes it more likely to withstand the nasty weather.
It is reassuring to see that the dividend growth in the company is supported by both profits and cash.