Interactive Investor

ii view: jobs boom is perfect for PageGroup

23rd December 2021 15:15

Keith Bowman from interactive investor

Another profit upgrade and forecast dividend yield of 4%. Should investors employ this global recruiter?

Trading update from 1 October to 30 November

ii round-up:

Employment agency PageGroup (LSE:PAGE) operate across 25 arenas from actuarial to technology companies. 

Accounting and financial services provided its biggest customer segment, generating just over a third of gross profit in 2020, followed by Legal, Technology, HR and Secretarial at around a quarter.

For a brief round-up of this latest trading update, please click here.

ii view:

Page employs over 7,000 staff in more than 35 countries. Around 70% of its business is made up of permanent hires. It is currently pursuing a strategy to expand and diversify the business by industry sectors, professional disciplines, geography and level of focus. Its biggest slug of fees comes from Europe at around 40%, followed by Asia-Pacific at 25%, the UK at 20% and the Americas at 15%. 

For investors, ongoing pandemic uncertainty and the difference between pent-up demand and a new sustainable trend, need to be remembered. Earnings can also be highly volatile given cyclical economic exposure.

On the upside, the upgrading of full-year profit expectations following this latest unscheduled trading update suggests ongoing positive trading momentum. Appropriately qualified candidates in many industries have become hard to find. Both sector and geographical diversity are enjoyed, while the shares currently sit on a forecast dividend yield for 2022 of around 4%. That's attractive, and not just in the current ultra-low interest rate environment. In all, and given current positive trading momentum, the shares look to remain worthy of ongoing investor support. 

Positives: 

  • Business sector and geographical diversity
  • Cost base reduced

Negatives:

  • Ongoing pandemic uncertainty
  • Above average price to NAV valuation

The average rating of stock market analysts:

Buy

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