Sthree Share Discussion Threads

[capitalist] 21/3/2022 09:53

Results look good to me. But what do I know?

[km18] 11/3/2022 12:59

...from last year...

Company overview:
SThree plc is an international recruitment company, providing specialist services in the science, technology, engineering and mathematics industries. STEM is proud of its ability to provide end-to-end experience for the customers and covers the whole spectrum from established leaders to start-ups. The firm operates in Continental Europe, UK, USA and Asia Pacific through 10 recruitment brands. In addition, they offer contractor services and visa support. The group follows a more organic approach towards business with almost no goodwill on the balance sheet.
Historically, you are looking at a company with continuous growth in revenues (except for 2020 obviously) and current trailing 12-month ROCE of 28.9%, growing at 45.8% CAGR. Gearing is effectively absent, except for some capital leases from IFRS 16. Last but not least, the company has generated (on a TTM basis) £1.22bn of revenue with a market cap of £732.97m, creating one of the top ranked P/S ratios in the sector.
Lates communication from STEM comes in the form of their Q3 trading update and the headline is what fascinates us : “Full year profit performance expected to be significantly ahead of consensus”. We like when companies include not only 2020 but also 2019 as a reference of performance and when they also include consensus as it makes the report much easier and quicker to analyse – well done to the management! Net fees are 29% up from strong growth in USA (up by 31%), Germany (35%) and Netherlands (24%). The great news comes from the fact that the company is actually ahead of 2019, with net fees 11% ahead and contractor order book has risen by 20%. The last 2 quarters have seen record trading, resulting in expectations for PBT for the year-end figures in November to be ahead of the consensus of £51.4m. the stock has had quite the run this year but this performance combined with the net cash of £51m on the balance sheet are a strong motive for a buy recommendation. If STEM manages a figure in the high £50m, applying the previous periods tax rate of 28% results in a £40-43m net profit and EPS in the region of 30-32p. This would bring down the P/E ratio to a healthy 17-18x.

Competitors: GATC, EMR, RWA are specialized HR recruiters we have covered before.

Short analysis (Interim 2021):

Cash went down by 5.75%, due to FX negative working capital
Net debt is positive, accruals need further review in our opinion
CA/CL = 1.66
Cash ratio = 0.27
Interest coverage = 56
P/S = 0.6, lower than the industry average
BV ps TTM = 101p, growing at 16% CARG
Operating profit of £28.2m, nearly double the figure from 2020
Gross profit Margin was 26.7%, vs 25% in 2020 H1 report...

...from WealthOracleAM

[tomps2] 01/2/2022 11:26

Great FY21 STEM results. Here's the presentation given to analysts 31.1.22, by Interim CEO, Timo Lehne & CFO, Andrew Beach. The IT investment delivers increased productivity and margins.

Video:

Podcast:

[baddeal] 31/1/2022 09:36

Yep good numbers announced, Numis have raised tp and Investec to buy. Hopefully this will help drive the share price which looks undercooked imo

[investing2retire] 31/1/2022 08:14

nice update.bought back in on the open.strong contractor demand will keep this upward trajectory moving

[welshmat] 07/1/2022 13:22

Glad I took some profits at ~600.

[clanger66] 07/1/2022 09:01

Jefferies have cut from buy to hold. Cut target price to 500p from 650p.

[undervaluedassets] 07/1/2022 08:58

is this just about the CEO leaving?

[welshmat] 16/12/2021 16:48

Seems like it's still on the way down, I'm curious to see where the share price settles at. Hopefully it doesn't cross the 400p line.

[chopp1] 13/12/2021 15:48

Massive overreaction from the market especially given the positive update and outlook!

[baddeal] 13/12/2021 15:14

Feels like a botched ceo exit which is very disappointing and has clearly spooked investors.Will need a clear plan and performance delivery for this to recover

[welshmat] 13/12/2021 11:51

Yeah, that was not the reaction I was expecting to a very good report. All I can think is that the CEO stepping down has spooked the markets, but it seems very odd but what do I know.

[nerja] 13/12/2021 08:26

Hells bells , glad we didn’t get a profit warning!

[baddeal] 13/9/2021 22:00

Numis upped tp to 700p

[tomps2] 13/9/2021 13:40

SThree (STEM) Q3 2021 Trading update to analysts

CEO, Mark Dorman and CFO, Andrew Beach give a trading update for Q3 2021.

Watch the video here:

Or listen to the podcast here:

[nw99] 13/9/2021 07:55

Well done scsw

[capitalist] 13/9/2021 07:45

I do like an update with the words ahead of consensus, especially with the word significantly in front of them!

From today's update: "Full year profit performance expected to be significantly ahead of consensus"

[sig1978] 02/9/2021 18:25

Should hit 600 in next two weeks im thinking

[sig1978] 01/9/2021 16:18

Up and away we go!! :-)

[investing2retire] 23/8/2021 16:23

GATC and STEM seem to be going in opposite directions.glad i sold GATC at 220p earlier and in june and kept STEM

[baddeal] 20/8/2021 17:14

Was getting to the level where I was thinking of selling down but keeps pushing higher. Anyone got insight of broker targets on stem?

[albanyvillas] 10/8/2021 13:56

GATC trading update a week today, STEM is far classier business

[texaspete2] 09/8/2021 17:54

Good volume today supporting the next leg up. GLA

[middlesboroughfc] 09/8/2021 15:49

its a beast