Recruitment business SThree (STHR) makes three-quarters of its gross profit outside of the UK, which provided a foreign exchange tailwind last year. But the market sent the shares down 3 per cent on the day these numbers were released. While revenues managed a 6 per cent improvement at constant currency, thanks to the group's focus on contracts rather than permanent appointments, market weaknesses in the UK and US contributed to a dip in operating profits.
Chief executive Gary Elden says that as a result of the tumultuous political background and the EU referendum, the UK job market remains "challenging", especially the banking sector. As a result, SThree has restructured its domestic teams. The US market may come under further pressure if President Trump intervenes in the flow of labour, although Mr Elden says he has yet to notice a discernible drop off in demand across the Atlantic. For now, he remains focused on the group's specialisms in science, technology, engineering and maths, taking comfort in the fact that contract business tends to fare better when economies stumble.
Last year's pre-tax profit was flattered by a £377,000 disposal gain. Analysts at Liberum expect pre-tax profits of £40m for the year ending November 2017, giving EPS of 21.2p (from £41m and 22.6p in FY2016).
| STHREE (STHR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 311p | MARKET VALUE: | £398m | |
| TOUCH: | 311-312p | 12-MONTH HIGH: | 355p | LOW: 221p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 59p | NET CASH: | £10m | |
| Year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 577 | 25.3 | 14.1 | 14.0 |
| 2013 | 634 | 15.5 | 6.1 | 14.0 |
| 2014 | 747 | 24.0 | 12.9 | 14.0 |
| 2015 | 849 | 38.1 | 21.0 | 14.0 |
| 2016 | 960 | 37.3 | 21.2 | 14.0 |
| % change | +13 | -2 | +1 | - |
Ex-div: 4 May Payment: 9 Jun | ||||
