Financial Trading Blog

Stock of the day 31/08/2016 – Hays PLC



Can Hays recruit any new investors with its full year update on Thursday?


Having slumped in the 2nd half of 2015 the New Year brought no joy for Hays, the recruitment company spending most of the first few months of 2016 hovering around 12 month-plus lows of £1.20 and below. Things began to pick up in Q2, the company teasing £1.40 for the first time since January; then the Brexit result happened and Hays’ recovery crumbled, the stock plunging nearly 35% in the space of a few sessions to hit a 3 year nadir of 91p. Since then, however, the stock has seen a firm recovery, rising to a current trading price of £1.32 (IT-Finance.com, 31/08/2016).

Hays PLC Chart August 2016 Spreadex Financial Spread Betting
(Source: IT-Finance.com 31/08/2016)

After a mixed bag of updates (with February’s half year report sparking a 10% decline as the company warned that demand for new staff in the UK had slowed, and April’s Q3 comments seeing hiring suffer in the run up to the referendum) Hays surprised investors with its fourth quarter statement back in July. Despite the pre-Brexit hubbub the company still managed to beat full year expectations; issues in the UK (especially in Q4) were countered by growth in continental Europe, leading to a 12% rise in overall fees year-on-year.

In terms of Hays’ full year figures, then, analysts are forecasting a 10% rise in pre-tax profit to £172.5 million, while the company itself has stated it expects a £15.9 million increase in operating profit to £180 million. However, this period only covers 7 days of post-Brexit Britain, meaning investors may be far more interested in any comments on the jobs sector, and whether hiring has slowed/is set to slow going forwards, than Hays’ now past, and somewhat irrelevant, glories.

Hays PLC has a consensus rating of ‘Hold’ with an average target price of £1.39.

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