Morningstar | Despite Difficult Operating Environment, Randstad Produces Decent 2018 Performance
Recruitment giant Randstad eased some investor fears Feb. 12 with a reasonable full-year update, with organic revenue growth of 5% over the period and margins held flat year over year, despite inflationary pressures in many regions. This did nothing to mask the weakening operating environment in certain European countries, causing growth to flatline in the fourth quarter, with the first-quarter outlook looking much the same. We are not panicking yet, however, and believe the current share price is discounting a full-blown near-term recession. Thus, the news that the situation hasn’t deteriorated further in 2019 was enough to move the share price higher. We stand by our EUR 61 fair value estimate and see an attractive opportunity as things stand.Geographically, it was a tale of two cities. In Europe, France and Germany saw declines in the fourth quarter, with weak auto production in the latter cited as one of the causes. The situation was very similar in Iberia. Further afield, North America remained solid, showing margin improvement in addition to reasonable organic revenue growth, while the rest of world segment continued to go gangbusters. We are monitoring the situation in Europe closely; however, given the unusually strong performance in France and Germany in the first half of 2018, we believe some element of catch-up here is not life-threatening.
Longer term, we believe Randstad, as one of the top three in global recruitment, is well positioned to benefit from numerous structural trends in the recruitment space. We also believe that a structural shift internally toward permanent placement, the professional market, and career transitioning services should ultimately reduce the volatility of the company’s revenue stream.
Randstad is a global staffing and recruitment company, providing various solutions in the human resources (HR) services space. Co.'s services include regular temporary staffing and permanent placement of candidates. In addition, Co. provides several other HR solutions, such as Recruitment Process Outsourcing (RPO), Managed Services Programs (MSP), payroll services, and outplacement. Co. provides four distinct service concepts: Staffing, Inhouse Services, Professionals and HR Solutions.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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