Karl Hunt & Roger McIntosh
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.
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.