Randstad Holding NV (Randstad) is a recruitment and human resources consulting business based and listed in the Netherlands. This is a company we purchased early last year in February believing that it was a good vehicle to benefit from a European economic recovery.  The company has operations throughout the world in three key areas, professional recruitment, temporary recruitment and human resources consulting services.

Recruitment agencies are a good bell weather to check the temperature of economies and a timely indication of where markets are in the economic cycle.

Within its industry group of Commercial & Professional Services we evaluate it globally as being the best rated company and within the broader Industrial economic sector grouping it is 13th out of 320 companies.

We first took a position in Randstad in February 2016 and following further review of both the company and broader European signals, increased our exposure to an overweight position in August 2016.  It ranks very highly on our price momentum model and very highly on quality measures such as low debt to total assets, very high interest coverage and expected return on equity, relative to its industry group and the broader market.

Over the last 6 month to its most recent reporting date, Randstad has outperformed the broader European market by around 30% in local currency terms.

Randstad reported Q4 2016 results last week, beating analysts’ expectations and confirming continued economic recovery in Europe which makes up 67% of group revenue. Europe overall was up +8% in Q3 2016, led by accelerating growth in France, Germany, Italy and Iberia. Interestingly there was marked growth in the hire of blue collar workers which is an early cycle sign showing increasing demand for workers involved in production.

Interestingly their results showed flat growth in USA for Q4 (same as Q4), Canada +4%, Australia/New Zealand still strong at +12%, and Japan still making progress but more modestly at +5%.

The shares have reacted positively up 4% and these results should lead to further analysts’ upgrades for 2017 profits.