More recent positive news from the recruitment sector with group spanning 31 countries Robert Walters (RWA) having announced continued positive momentum materially ahead of market expectations. Its shares have though now more than doubled since October and are not too far off highs reached three years ago. Shares in smaller peer, though still operating in 20 countries across the world, Empresaria (EMR) remained above 40p in October, have previously reached well above 100p, and are currently still below 80p despite the company being set for a summer of positive macro-economic tailwinds and the operational gearing they bring.
The countries Empresaria operates in include four of the largest staffing markets of the US, Japan, UK and Germany along with presence elsewhere in Asia Pacific and in Latin America. It provides services across the Professional; IT; Healthcare; Property, Construction and Engineering; Commercial and Offshore Recruitment Services sectors. The group previously updated on trading last month, stating that it “has made a strong start to 2021 with positive momentum developing in many parts of the Group. While there remain some ongoing challenges and risks from COVID-19, visibility of the remainder of the year is improving. The Group now expects adjusted profit before tax for both the first half and full year 2021 to be ahead of 2020.”
The 2020 calendar year saw half-year adjusted earnings per share of 1.9p on net fee income of £28.2 million evolve into full-year respectively 4.1p and £54 million. We note there was an overall loss reported for the year but that was only due to intangible assets impairment – the deficit of current assets to total liabilities was reduced by £1.9 million to £14 million.
With that, a Price/adjusted Earnings multiple of circa 17x may look high enough. However, those were massively adversely impacted earnings. House broker N+1 Singer currently has 4.5p per share pencilled in for this year, but looking ahead notes “on 2019 earnings (pre-COVID), the shares trade on a P/E rating of 8.2x, which looks undemanding if a full recovery can be delivered. As further evidence of the recovery builds, we would expect this to be recognised in a higher share price”. We suggest there reason for confidence that following updates will show further evidence of the recovery building and that a full recovery can be delivered – also noting cost action taken last year should come through. We believe such news could see the shares back above 100p before Christmas.
Filed under: Empresaria, UK Oil & Gas, Remote Monitored Systems, NMCN, Lekoil, HotStockRockets
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