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The lesser-known FTSE 250 recruitment firm Web page Group (LSE: PAGE) is down 26% this 12 months after weak fourth-quarter outcomes hit the inventory arduous. Rising uncertainty within the UK jobs market has led the agency to undergo its worst begin to a 12 months since 2022. Now at 250p a share, it’s price lower than half what it was on the finish of 2021.
In its newest outcomes launched this Wednesday (9 April), it reported an 11.7% drop in gross revenue, down from £220m to £194.2m. The EMEA area was hit the toughest, down 14.5%, with the UK dipping 12.7% and America down 1.1%.
The corporate famous the unpredictable financial setting that might make 2025 a troublesome 12 months. Consequently, it didn’t present any forward-looking steerage right now. Nonetheless, it does plan to implement price financial savings of £15m by simplifying its administration construction and lowering the workforce by 25%.
Web page Group’s earnings have been in decline for a number of years now, slipping from £139m in 2022 to £28.4m final 12 months. Whereas income has additionally dropped, it’s executed so at a slower price, bringing the corporate’s web margin all the way down to a worrying 1.39%.
Notably, earnings within the US elevated 7% resulting from greater demand within the engineering and manufacturing sectors.
A dividend play?
Web page Group has a protracted historical past of dividend development, barring an comprehensible lower throughout Covid. International lockdowns led to an nearly full cessation of recruitment operations throughout that interval.
Nonetheless, in 2021, dividends have been reinstated at 15p per share and have since elevated to 17.11p. Total, its annual dividends have elevated at a compound annual development price of 5.2% a 12 months. I might anticipate that development to proceed — except extra lockdowns happen, in fact.
After the worth dip, the yield’s as much as 7%, making the inventory a beautiful possibility for earnings traders. Nonetheless, if the worth retains falling, it might negate any dividend positive aspects.
What’s the chance of that occuring?
Valuation
Together with the falling worth, Web page Group’s price-to-earnings (P/E) ratio has additionally dipped by round 25%. Nonetheless, now at 29.6, it’s nonetheless properly above the FTSE 100 common of 11.4. At 9.63, its price-to-cash stream (P/CF) ratio can be barely above common. These metrics point out that, regardless of the falling worth, the inventory may nonetheless be considerably overvalued.
Subsequently, there’s a good probability the worth could dip decrease earlier than stabilising or recovering. However analysts stay optimistic in the long run, with the common 12-month forecast 380p — a 44% rise. The present financial state of affairs is dire however will possible stabilise and enhance by subsequent 12 months. If the corporate can keep its dividends by means of all of it, it may ship first rate worth to shareholders in the long term.
Nonetheless, I’m not satisfied sufficient to contemplate the inventory simply but. different related shares on the FTSE 250, I’d think about worth comparability firm MONY Group to have higher potential. It has a 6.5% yield and a P/E ratio of solely 12.45. Specialist producer Morgan Superior Supplies additionally seems to be promising, with a 6.6% yield and P/E ratio of 10.5.
