ASGN - Embedded Expectations Analysis - 2020 10 01
ASGN Incorporated (ASGN:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with a 13.4x Uniform P/E, implying bearish expectations for the firm. Although management's concerns about Apex, ECS, and bookings growth suggest the potential for near-term headwinds, market expectations remain far too bearish, and longer-term equity outperformance remains warrantedSpecifically, management may have concerns about the resiliency of their government business, continued declines in Apex's gross margins, and retail accounts growth. In addition, they may lack confidence in their ability to expand market share in their large camp portfolio, sustain ECS's healthy book-to-bill ratio, and maintain bookings growth in H2 2020. Finally, they may be concerned about their ability to sustain their ECS business' margins, and they may lack confidence in the sustainability of overall demand
Although management's concerns about Apex, ECS, and bookings growth suggest the potential for near-term headwinds, given the strong secular growth drivers surrounding the firm's position in high technology industries, market expectations remain far too bearish, and longer-term equity outperformance remains warranted for ASGN
ASGN provides information technology (IT) and other services in the technology, digital, creative, engineering and life sciences fields across commercial and government sectors. The company's segments are: Apex, which provides technical, digital, creative, scientific and engineering personnel for contract, contract-to-hire, and permanent placement positions to clients across the United States and Canada; Oxford, which provides staffing and permanent placement services in select skill and geographic markets in the United States and Europe; and ECS, which delivers solutions in cloud, cybersecurity, artificial intelligence, machine learning, application and IT modernization, science and engineering.
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