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PageGroup - still bonkers

By Chris Bailey | Wednesday 11 July 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


I called investors who bought shares in recruitment company PageGroup (PAGE) 'bonkers' back in January ...but despite my excitable language, the shares are a little bit higher than that level currently despite shedding a percent or so today following a latest update.

This pullback was despite 'a record quarterly gross profit' after 'strong growth of 16%' in its fiscal second quarter and a 24% revenue rise in 'large, high potential markets' reflecting double digit growth across Europe, Asia and the Americas. In fact, for the company, the only country that really showed a pullback was - once again - the UK.

Inevitably the 'Brexit' word was blamed for the UK's 1.9% revenue decline in a 'muted' market. Whatever...let us just call it a competitive market and low business confidence. At 17% of the group it is not hugely influential - as shown by the aforementioned record numbers - but it is not helpful...especially with the market cap of the company just below £2 billion. Yes, it is hopeful of an operating profit just above current analyst hopes - currently in the mid £130s millions - but all this does is put the EV/ebit multiple in the mid-teens. For a sector where famously the assets walk out of the door each day...that's rich enough.

Looking back at my January article, I talked about how such a rating was only really consistent with a 'Goldilocks' world of synchronised global growth. Six months later, what do we have? Trade hassles, economic growth reductions, bubbling populism and related. For PageGroup this should be consistent with a lower rating and hence a lower share price.

Despite emerging market growth and the ongoing battle for talent around the world, I just cannot get excited. If you own it, I’d sell and if you don't....well use its services if you must but do not go near the shares...unless you think I am bonkers.


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