Staffline Share Discussion Threads

[nurdin] 03/2/2017 13:22

cheers Riv...sounds good.

[rivaldo] 03/2/2017 12:29

Finncap's note reads well - here's the rest of their investment summary FYI:

"Contract wins likely. Right at the end of 2016, the Government awarded
positions on the new Work and Health Programme framework. Staffline won a
position on all seven regions, the only company to do so. Contracts will now be
bid for and the scene is set for Staffline to announce a series of wins.

Breadth of opportunity. On top of this framework (which is likely to be worth
c.£1.7bn over four years), Staffline has opportunities in providing
apprenticeships (funded by the £3bn levy), win further probation contracts and
grow its communities work.

High standards and quality of service. Some providers of blue collar,
temporary workers operate questionable working practices. Staffline has built
its brand on providing the highest quality of service, fully compliant with
regulations and actively engaging in improving market working practices. This
has supported market share gains as competitors have struggled to survive
under tighter regulation and a greater focus on quality by clients.

Strong cash flow. Other than a timing issue at the end of FY 2015, cash flow
has been consistently strong. Operating profit conversion was 117% in 2016
and averaged 95% over the past five years. A move into net cash is possible in
2017 (we forecast early 2018).

1615p target based on sum of the parts. We value Staffing at a 20%
premium to Hays and SThree due to the better growth track record and
Peopleplus at a 25% discount to the outsourcers given the need to renew or
replace contracts"

[flagon] 03/2/2017 09:59

This morning -

FinnCap
Staffline (BUY)

Framework position secured, contracts next

The share price is factoring in significant risk on Staffline’s ability to replace its Government contracts and weather any storm that Brexit produces. However, Staffline is the only company to have won a place in all seven regions of the new Work and Health Programme framework, flexible labour (such as that provided by Staffline) is an essential part of the UK economy and the group has a proven ability to continue to grow against changing market conditions. We expect contract wins to be announced throughout 2017 and reiterate our Buy recommendation.

Guy Hewett

020 7220 0549

[aishah] 03/2/2017 09:19

finnCap BUY, Reiterates 1615p target

[nurdin] 02/2/2017 10:32

If I recall,one broker has a target of £16 here.Certainly heading in the right direction !

[gswredland] 01/2/2017 17:04

Thanks Rivaldo. Glad to have this as one of my biggest holdings. Fingers crossed

[zho] 01/2/2017 14:38

Many thanks

[rivaldo] 01/2/2017 14:15

Cheers zho - here's the full article:

"Buy Staffline: it's growing fast and undervalued
Richard Evans
01 February 2017

Andy Hogarth, chief executive of Staffline, the recruitment firm, certainly believes in clear and ambitious targets.

At the end of 2010 he said he wanted to “treble the treble” by growing the company’s sales and profits over the following three years (the business had already trebled in size since its flotation on Aim 2004).

When he achieved that goal he set himself a new one: to “burst the billion”, by which he meant £1bn in sales, along with profits of £30m, by 2017. The profit element of the target was later increased to £50m following an acquisition.

While City analysts’ forecasts currently fall a little short of the goal, at £930m of sales and £45m of profit on the “Ebitda” measure, it would be rash to write off Mr Hogarth’s chances too early, according to one fund manager who knows him well.

“Andy Hogarth is an individual we have known for 10 years and he has a huge amount of drive, energy and vision,” Ken Wotton, manager of the Wood Street Microcap fund, told Questor.

“He has successfully executed on the vision and has grown the business very materially.

“He has been clear to the markets about his financial targets – it is rare for chief executives to be so explicit – and has then achieved them. So we are big supporters of his and believe there is a good chance that he will ‘burst the billion’ this year. While some of the growth will have to come from acquisitions, Andy has a good record in that respect.”

Staffline operates in two areas: blue-collar recruitment and “employability”, which involves helping unemployed people return to work under government schemes. The former is a big market, worth about £8bn a year across the country and despite its rapid growth Staffline still accounts for just 8pc of it.

“The company is a meaningful player but there is plenty of scope for further growth”, Mr Wotton said.

Although margins in this part of Staffline’s business are relatively low at about 4pc, it is the faster growing of the two divisions and it largely serves non-cyclical parts of the economy – 70pc of revenues come from the food sector (customers include Tesco (Frankfurt: 852647 - news) and Asda) and much of the rest from online retail.

Margins are higher in the “employability” division, at about 15pc, although growth prospects are to some extent limited by the Government’s system of appointing firms to operate return-to-work schemes on a regional basis: it will be hard to increase revenues organically unless the firm wins the contract for a new region.

However, the company is well-placed to win such contracts, with top-quartile performance in achieving the scheme’s goals along with competitive pricing, Mr Wotton said. The division could also grow by acquisition, as the successful purchase of A4e in 2015 showed, while profits can improve as a result of increased efficiency.

The combination of the two lines of business is unique in Britain, giving the company scope for long-term synergies.

Last week’s results for the 2016 full year showed a 26pc rise in sales, just under half of which was organic growth, while earnings before interest and tax rose by 32pc. These results were marginally ahead of analysts’ expectations, despite the fact that the Brexit vote took place halfway through the year.

The management said the company had not seen any “material impact” from the referendum result. Nonetheless, the vote still hit the share price, which had already fallen significantly from a peak of about £16. Shares (Berlin: DI6.BE - news) fell as low as about 750p before recovering some of the lost ground to close at £10.73 yesterday.

A falling share price in conjunction with rising profits means a much lower “rating” or price-to-earnings ratio, of course. The shares now trade at about nine times forecast earnings for 2017.

“If the firm can deliver on its targets and Brexit fears prove unfounded, we can expect some of the fall in the p/e ratio to be undone,” Mr Wotton said.

Questor likes executives and fund managers who have “skin in the game” and Mr Hogarth owns about 6pc of Staffline, while Mr Wotton has a “significant” holding in his firm’s funds.

Mark Slater, another fund manager Questor admires, is another long-term holder of the shares. He said Staffline had “a fantastic track record of organic growth”.

Questor says: Buy

Ticker: STAF "

[flagon] 01/2/2017 11:06

Analysts consensus appear to be undercooked ?

===================================================================================

Staffline looks to acquire ‘mini Staffline’ in Scotland
Wed, 25 Jan 2017

Andy Hogarth, Staffline CEO
Staffline is considering hitting the acquisition trail in the form of a ‘mini Scottish Staffline’ to help it “burst a billion” in 2017, according to Andy Hogarth, CEO of the staffing services, outsourcing, training and employability organisation.

The group’s results for the year to 31 December 2016, published this morning, reveals revenue increased 26% to £882.4m, up from £702.2m in 2015. This puts Staffline on track to hit Hogarth’s target of “bursting a billion” this year as referred to six months ago.

Commenting on making up the remaining £118m over the next year, Hogarth told Recruiter part of it would come through organic growth and encouraging sales staff to bring in more business and possibly a further acquisition in the form of a blue-collar, industrial recruiter in Scotland.

“We’re particularly interested in Scotland,” Hogarth said. “We’re underrepresented in Scotland. We would certainly be interested in acquiring a mini Staffline – a blue collar industrial-type company.”

As for immediate threats to hitting the £1bn target, Hogarth said a hard Brexit resulting in the immediate repatriation of non-UK EU nationals would adversely affect his business, adding he is working on the assumption that these individuals will be allowed to stay in the UK.

“Our working assumption is that everyone that’s already here will be allowed to stay. I cannot imagine that we are going to frogmarch 3m Eastern Europeans down to Dover through the tunnel.

“If we did that, not just Staffline, every employer in the country in any sort of manufacturing or service industry would be severely in the poo.”

And Hogarth added a gradual reduction in the reliance on non-UK EU nationals would actually benefit the organisation’s employability arm that works with helping the long-term unemployed back into work.

Link ->

[nurdin] 01/2/2017 10:47

Unfortunately a subscription site but here is the preamble:

"Andy Hogarth, chief executive of Staffline, the recruitment firm, certainly believes in clear and ambitious targets.

At the end of 2010 he said he wanted to “treble the treble” by growing the company’s sales and profits over the following three years (the business had already trebled in size since its flotation on Aim 2004).

When he achieved that goal he set himself a new one: to “burst the billion”, by which he meant £1bn in sales, along with profits of £30m, by 2017. The profit element of the target was later increased to £50m following an acquisition.

While City analysts’ forecasts currently fall a little short of the goal, at £930m of sales and £45m of profit on the “Ebitda” measure, it would be rash to write off Mr Hogarth’s chances too early, according to one fund manager who knows him well.

“Andy Hogarth is an individual we have known for 10 years and he has a huge amount of drive,..."

[rivaldo] 01/2/2017 09:30

New 6-month highs now - hopefully a quick run-up to 1200p+ from here.

[silverfern] 31/1/2017 13:08

so she has a £3.5m investment in the company. Beats my holding!

[nurdin] 31/1/2017 11:37

Have just learnt from the company that Diane Martyn retains an interest in 350,000 ordinary 10p shares of the Company as part of the Joint Share Ownership Plan (“JSOP”).

[iain123] 30/1/2017 12:46

Seems to be a daily occurrence here with the share price diving first thing and then recovers throughout the rest of the day.

[nurdin] 30/1/2017 09:29

Another RNS coming out shortly to clarify her current holding.

[cwa1] 30/1/2017 08:16

Hello ebb

NOT an expert but on a quick glance it mentions an "initial notification"

So she exercised 100,000 options at 348.6p then sold them all, the same day, at 1032.5p, presumably leaving her with zero.

Very nice work if you can get it and not much of a show of faith in her company but she's probably got plenty more where that came from(tho I haven't looked!).......

[eggbaconandbubble] 30/1/2017 08:00

Group Managing Director share sale. I can't find director share holdings on the company website.
Anybody know how many she now holds?

[rivaldo] 26/1/2017 12:05

The IC say Buy today - I note that Berenberg forecast 124p EPS this year.

Should be free to view if you search via Google, not sure about via this link for everyone:

[fruitninja84] 25/1/2017 14:10

Blue finish today and a breakout? I'm seldom surprised by the markets. I hold and hopefully will get £12.

[rivaldo] 25/1/2017 14:03

Finncap have a 1615p target price and say today:

Extracts:

"Contract wins likely and will drive the shares
BUY

Staffline has reported another strong set of results and a positive outlook.
Adj. EPS was up 23% on last year (our forecast 22%) backed by strong cash
flow. Staffing goes from strength to strength and is now the clear market
leader but with only 9% market share that continues to grow. Early signs on
the new welfare to work rebids are positive and success here is likely to be
the main driver for the shares. We do not anticipate making any major
changes to our PBT/EPS forecasts and maintain our target price."

"1615p price target. We value Staffing at a 2017E EV/EBIT of 12.6x (a 20%
premium to Hays and SThree) and Peopleplus at 10x (a 20% discount to the
Outsourcers). The main catalyst to achieving this will be contract wins in the
welfare to work area and continued evidence that Staffing’s market share gains
can offset any market challenges."

[flagon] 25/1/2017 13:22

Motley Fool 25/1/17

This fast-growing small cap looks cheap to me after 30% profit growth

Underlying pre-tax profit rose by 30% to £36.7m last year at employment specialist Staffline Group (LSE: STAF), while its dividend rose by 29% to 25.8p.

Adding to the stock’s appeal is a fairly modest valuation. Staffline trades on a trailing P/E of just nine after today’s results.

Against this positive backdrop, it’s hard to see why Staffline shares have lost 21% of their value over the last year. Today I’ll explain why I believe this stock offers an opportunity for small cap investors. I’ll also consider an alternative stock with less UK exposure.

A contrarian buy?
Staffline shares fell by more than 4% this morning, despite the group reporting a strong start to the year, with several new contracts and a record sales pipeline. In my view, the main reason for this weakness is that investors are uncertain about whether Staffline’s profits can be maintained.

The group has two main divisions, each of which contributes broadly equally to profits. In Staffing Services, Staffline draws on its database of 292,000 workers to provide up to 51,000 agency staff a day to more than 1,500 clients.

Staffline’s other division is referred to by the company as Employability. The firm has a number of contracts to run training and employment programmes for the Department of Work and Pensions and the Ministry of Justice.

Both lines of business could be vulnerable in a UK recession, or if Brexit results in a shortage of low-cost labour in the UK. It’s too early to say whether these problems will materialise, but Staffline’s management appears to have a good eye for profitable opportunities. I expect they will be able to manage these risks and the Brexit transition.

Analysts are cautious about the outlook for 2017 and expect earnings per share to rise by 3% to 116.1p. But with the shares trading on a forecast P/E of nine, I think the risks are reflected in the price. If earnings guidance is upgraded later this year, I believe the shares could perform strongly.

Link ->

[qs99] 25/1/2017 12:18

Really odd that divi is payable so late, really isn't very clever

[loobrush] 25/1/2017 12:08

Share price has dropped to ridiculous level in my view after these brilliant results
and growth prospects. I expect that it will go back up to a sensible price after the analysts have been briefed this morning and then done their figures.
Fears over their immigrant workforce are way overdone.