US Edition Full-year pre-tax profits for 2010 of £101m were nearly four times higher than the previous year, while gross profit per employee, despite the hiring of nearly 1,000 new staff, was up about £25,000 at £155,300.
Analysts, though not surprised by the strong performance, welcomed the numbers, as unlike some of its major clients, banks in particular, Michael Page has managed to increase revenues at a faster pace than costs, achieving what is known in the business as “positive jaws”.
Investors could also take comfort from the increasing proportion of the company’s revenues that are being generated outside of the UK, with gross profits in Asia Pacific up 54pc on a constant currency basis, increasing non-British revenues to 72pc from 68pc in 2009.
So what’s not to like? Michael Page this morning have fallen more than one percent, admittedly on low trading volumes, but a fall nonetheless.
The reason for this is shown by the reaction to the results announcement from analysts at Societe Generale put the shares on a ‘sell’ rating.
SG argues that though the performance was largely in line with expectations, though they think the results were a “slight miss”, Michael Page’s valuation is already pretty full and does not warrant an upgrade.
Valued at about 24 times 2011 earnings it is hard, despite the optimistic outlook for the company given by chief executive Steve Ingham, to see why Michael Page should trade at any more of a premium to the rest of the recruitment sector.
With the dividend back at a healthy 21.1p, from 3.8p in 2009, and a share buyback programme well underway, Michael Page looks like a good yield play for the time being and therefore remains a good hold for investors. This is one recruiter that is worth keeping on retainer.
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