STHREE (STEM) – Business Services
| Price: 185.5p +7.9% | P/E: 13.4 |
| Market Cap: £229m | Yield: 7.8% |
Specialist employment group SThree posted a 12% drop in net fee income for the year to 30 November, but encouragingly the company confirmed its pre-tax profit guidance.
Investors also took heart from an improving trend over the four quarters, underpinned by the US returning to growth, and the strength of the contractor order book at five months’ worth of net fees.
Our View:
Recruitment firms are leading indicators on the business cycle as companies tend to hire when they are feeling positive about their prospects and stop hiring or lay people off when they are feeling less confident.
We notice SThree shares were ticking better going into this report, albeit from a very depressed level, which suggests more ‘adventurous’ investors think there is a trade to be had.
However, recruiters tend to be fairly binary bets and we would like to see the quarterly trend confirmed before getting our hopes up.
Read the press release here:
https://www.sthree.com/en-gb/investor-centre
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