Interactive Investor

ii view: recruiter PageGroup ups profit forecasts again

6th October 2021 16:57

Keith Bowman from interactive investor


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A record-breaking third quarter, strong September trading and shares at an all-time high. Buy, sell or hold?

Third-quarter trading update to 30 September 

  • Gross profit up 65% to £228 million versus 2020 – up 12.9% versus the 2019 quarter
  • Net cash up 28% to £195 million vs Q3 2020

Chief executive Steve Ingham said:

"I am pleased to report that the improvement in results we saw in Q2 continued into Q3. We are continuing to compare our results to 2019, our record gross profit year. We are the clear leader in many of our markets, with a highly experienced senior management team. 

“Looking ahead, there continues to be a high degree of global macro-economic uncertainty as Covid-19 remains a significant issue and restrictions remain in a number of the Group's markets. However, the strength of our performance in Q3, and notably in September, has further increased confidence in our outlook for the year.”

ii round-up:

Global employment agency PageGroup (LSE:PAGE) has again raised its full-year operating profit forecast as it detailed strong third-quarter trading.

Gross profit in the quarter jumped 65% compared to the compatible period in 2020 and by nearly 13% versus the pre-pandemic 2019 quarter. Full-year operating profit is now expected to come in at around £155 million, up from a previous estimate of between £125 million and £135 million. 

PageGroup shares rose by more than 7% in UK trading, having already more than doubled since pandemic market lows in March 2020. Shares for sector giant Hays (LSE:HAS) are up by close to 55% over that time, while smaller rivals SThree (LSE:STEM) and Robert Walters (LSE:RWA) are up by 150% and 200% respectively. 

Page exited the quarter strongly with September fee growth of 26% compared to September 2019. Growth was led by the UK, where it almost doubled. Fees for its biggest profit earning region, Europe, the Middle East and Africa (EMEA), grew by almost 46%. 

The number of fee earning staff rose by 329 in the quarter to 5,772. That’s still down from the near 6,100 back in the same quarter of 2019, pushing gross profit per fee earner up 21%. 

The record third-quarter performance was seen across the business and came despite the backdrop of continued restrictions or lockdowns in many of its markets. 

Company investments have included hiring around 1,000 experienced fee earners since the depths of the pandemic in the second quarter of 2020, and rolling out its new salesforce-based customer relationship management software. 

Germany, its third-largest market, delivered another record quarter. Fee growth in China rose by a fifth. Japan enjoyed a record quarter with fee growth of 36%. Group net cash rose to £195 million from £152 million this time last year.

A fourth-quarter and full-year trading update is likely around mid-January. 

ii view:

Founded in 1976, PageGroup today employs consultants in over 35 countries.  It seeks to fill positions across 25 sectors from actuarial to technology companies. Accounting and financial services provided its biggest customer segment in 2020, generating just over a third of gross profit, followed by Legal, Technology, HR and Secretarial at around a quarter. It is currently pursuing a strategy to expand and diversify the business by industry sectors, professional disciplines, geography and level of focus. 

For investors, a still Covid clouded outlook and the difference between pent-up demand and a new sustainable trend need to be remembered. 

On the upside, PageGroup enjoys both sector and geographical diversity, while a recent special dividend and an estimated forward dividend yield of over 2% are not to be ignored in an era of ultra-low interest rates. In all, and with the shares trading close to the current analyst estimate of fair value at 651p per share, the good news may be in the price for now.  


  • Business sector and geographical diversity
  • Cost base reduced


  • Ongoing pandemic uncertainty
  • Above average price to NAV valuation

The average rating of stock market analysts:

Strong hold

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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