Investment: Can Select keep up the pace?
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Investment: Can Select keep up the pace?
THE PERFORMANCE of the recruitment company Select Appointments has defied belief in recent years. Its shares have doubled in the last year and risen by a factor of 20 in the last five years.
The company is now valued at over pounds 1bn, which stretches credulity for a business that yesterday reported first-half profits of $20m, even if the figures were up nearly 70 per cent on the previous year. Select is now reporting in dollars after its listing in America earlier this year, which raised pounds 102m and the switch to US accounting regulations also means it has scrapped its dividend.
The question for investors, of course, is: can the company keep up this pace?
The City certainly seems supportive, marking the shares up another 12.5p to 1019p yesterday. Analysts like the wide geographic spread and Select's strategy of avoiding low-margin, high-volume contracts.
Like all recruitment companies, Select claims to be protected from a downturn. It has certainly been acquisitive, buying eight businesses so far this year, and now has operations in 22 countries and 17 different sectors including IT, legal, administration, financial and healthcare. Only 5 per cent of its business is in permanent jobs, which are more sensitive to economic fluctuations.
Operating margins rose from 5.3 per cent to 6 per cent and large parts of its office network have been open for less than three years, meaning they have yet to reach optimum performance.
It all sounds very gung-ho but the fact remains that recruitment is a cyclical sector whose assets - its staff - can walk out of the door. On full-year forecasts of pounds 50m, the shares trade on a forward multiple of 34. Though the record is hard to fault, that looks quite high enough for now. And after the run of the last few years there has to be an argument for taking profits.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments