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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 surroundings that would make 2025 a troublesome 12 months. Consequently, it didn’t present any forward-looking steerage presently. 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 accomplished so at a slower fee, bringing the corporate’s web margin all the way down to a worrying 1.39%.
Notably, earnings within the US elevated 7% resulting from increased demand within the engineering and manufacturing sectors.
A dividend play?
Web page Group has a protracted historical past of dividend development, barring an comprehensible reduce throughout Covid. World lockdowns led to an virtually 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 fee of 5.2% a 12 months. I might count on that development to proceed — until extra lockdowns happen, in fact.
After the worth dip, the yield’s as much as 7%, making the inventory a lovely choice for earnings buyers. Nonetheless, if the worth retains falling, it might negate any dividend features.
What’s the chance of that taking place?
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 move (P/CF) ratio can also be barely above common. These metrics point out that, regardless of the falling worth, the inventory might nonetheless be considerably overvalued.
Subsequently, there’s a good probability the worth might dip decrease earlier than stabilising or recovering. However analysts stay optimistic in the long run, with the typical 12-month forecast 380p — a 44% rise. The present financial state of affairs is dire however will doubtless stabilise and enhance by subsequent 12 months. If the corporate can preserve its dividends by all of it, it might ship first rate worth to shareholders in the long term.
Nonetheless, I’m not satisfied sufficient to think about the inventory simply but. Taking a look at different comparable shares on the FTSE 250, I’d take into account 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 appears to be like promising, with a 6.6% yield and P/E ratio of 10.5.
