2018 was initially looking very good for Hays. After opening at £1.85 the stock had shot up to £2.07 by the end of January, a price it briefly surpassed in late February as it hit £2.08. Yet cut to a month later and the company had fallen under £1.90, a level it struggled to climb beyond until mid-July, at one point hitting a 4 month low of £1.78 in April.
(Source: Spreadex, 23/08/2018)
However, July’s fourth quarter update – more on that below – revitalised the firm, sending it all the way to a record peak of £2.10. And while it wasn’t able to hold on to those highs, it has managed to keep above £2, with Hays PLC now at a current trading price of £2.02.
What was so magic, then, about July’s Q4 statement? Well, despite concerns about the global economy, with everything from Brexit to the US-China trade war threatening growth, Hays posted some rather eye-catching numbers. Total like-for-like net fees were up 15%, breaking down as a 5% increase in the UK & Ireland, a 14% rise in Australia & New Zealand, a 16% jump in Germany and a 23% surge in the Rest of the World. The RoW division itself saw a record quarter in the USA, with LFL net fees rising 40%, with a 37% increase in China and a 15% jump in France.
More importantly, the company said that its full year operating profit would be ‘marginally ahead’ of the current market expectations of £240.9 million. And given that that number already marks a near 14% improvement on 2017, you can see why investors were so jubilant, sending the stock more than 8% higher after the release.
In terms to the reaction to the company’s full year results next week, it will likely be dependent on how far ahead of forecasts Hays’ operating profit actually comes in at, alongside any hint at how it expects to perform in 2018/19.
Hays Plc (LON:HAYS) has a consensus rating of ‘Hold’ alongside an average target price of £1.92.
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