15 August 2017Reading time: 3 minutes

Randstad recently managed to present positive second quarter results, while the further growth of the recruitment market sets the lights on green. Despite that it seems that the stock price is lagging.



Recently published research reports show that the Dutch recruitment market is growing. In July branch organization ABU announced that during the first half year of 2017 the Dutch recruitment market grew 6% regarding the revenue as well as the amount of hours, compared to the same period last year.


At the end of July the company information specialist Graydon shared their expectations that the Dutch
recruitment market will continue to grow with 7,2%. According to Graydon, all the recruitment companies are predominantly positive about their growth expectations.


This positive market trend was partly shown in the second quarter results, which Randstad presented at July 25. The recruitment company saw their total revenue increase with 15% to EUR 5,87 billion annually, where the revenue growth excluding takeovers and business sales came upon 9,3%.


Divided in regions the revenue growth in Europe was 11%, while this was 12% in the rest of the world. However in the United States the revenue growth remained limited to 1%, while in the Netherlands the revenue growth came upon 2%. Randstad was especially positive surprised by the results in South-Europe. In Italy the revenue increased with 29%, while in the region Spain/Portugal the growth came upon 16%.


However the revenue growth did not resulted in a higher net profit for Randstad. Because of the higher
depreciations on companies that were taken over and goodwill, but also because of increased interest costs, the net profit dropped with 2% to EUR 152.6 million on an annual basis. Randstad expects that the digital transformation is going to be the biggest challenge for the coming period. A huge next step was made last year with the acquisition of Monster Worldwide for USD 400 million but the American recruitment website saw their revenue drop during the last quarter with 16% on an annual basis. It remains to be seen how this will develop in the coming period.


The second quarter results which were better than expected caused analysts to be predominantly positive about the share. Theodoor Gilissen maintained the ‘recommended’ advice for Randstad because of the continues revenue growth and value ratio’s, which according to the asset manager clearly remains below the average of the sector. Theodoor Gilissen maintains a price target of EUR 60 for Randstad.


ING raised the price rate for Randstad with EUR 4 to EUR 64 and repeated the buy advice. The business bank expects that the growth of Randstad will carry on the coming period in Europe, while the United States will remain stable. A catalyst can be the acquisition of Monster, because possible cost reductions for the platform are not yet


As a result of the second quarter results the stock price rose in a short period of time with 5% and was 40%
higher at the end of July compared to a year earlier. However, earlier this year the stock price of Randstad was significantly higher. The price-earnings ratio of the share is currently 16 and the dividend yield is 3.7%. This is fairly in line with Adecco, which maintains a price gain ratio of 14.7 and a dividend yield of 1.2%.

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16/09/2019 01:02:49