Hays plc – Value Analysis (LONDON:HAS) : December 26, 2017

Capitalcube gives Hays plc a score of 78.

Our analysis is based on comparing Hays plc with the following peers – Robert Walters Plc, SThree plc, PageGroup PLC, Hydrogen Group plc, Staffline Group plc, Prime People Plc, Empresaria Group plc, Servoca Plc and Impellam Group plc (RWA-GB, STHR-GB, PAGE-GB, HYDG-GB, STAF-GB, PRP-GB, EMR-GB, SVCA-GB and IPEL-GB).

Investment Outlook

Hays plc has a fundamental score of 78 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It currently trades at a Price/Book ratio of (4.55).
  • HAS-GB outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • HAS-GB‘s median net profit margins and relatively high asset efficiency give it some operating leverage.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • HAS-GB‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s median gross margin and relatively high pre-tax margins suggest non-differentiated product portfolio but with tight cost control relative to peers.
  • While HAS-GB‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median P/E ratio and may be factoring in some sort of a strategic play.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.
  • HAS-GB has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

HAS-GB has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 0.01% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 10.37%), and a well-cushioned interest coverage level of 60.43x, HAS-GB can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 9 chosen peers for the company, only 7 of the stocks have an outstanding debt balance. Companies with no debt include PAGE-GB and PRP-GB.

HAS-GB has maintained its Quick & Able profile from the prior year-end.

  • HAS-GB‘s interest coverage is its highest over the last four years and compares to a low of 16.30x in 2013.
  • While its interest coverage increased to 60.43x from 53.24x (in 2016), its peer median decreased during this period to 37.07x from 42.05x.
  • Interest coverage rose 12.17 points relative to peers.
  • HAS-GB‘s debt-EV is its lowest over the last four years and compares to a high of 10.76% in 2013.
  • While its debt-EV decreased to 0.01% from 1.92% (in 2016), its peer median increased during this period to 10.37% from 9.60%.
  • Relative to peers, debt-EV fell 2.67 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Robert Walters Plc 10.37 1.33 33.3 92.75
SThree plc 2.19 1.31 88.66 599.34
PageGroup PLC 0 2.01 322.02 999
Hydrogen Group plc 25.88 1.42 -3.91 55.99
Staffline Group plc 14.07 1.06 7.67 53.09
Prime People Plc 0 3.17 No interest exp 999
Empresaria Group plc 42.29 1.01 11.5 20.2
Servoca Plc N/A 1.46 40.84 84.13
Impellam Group plc 36.75 1.13 8.33 24.11
Hays plc 0.02 1.42 60.43 1209.81
Peer Median 10.37 1.38 37.07 88.44
Best In Class 0.02 3.17 No interest exp 1209.81

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Company Profile

Hays plc engages in the provision of recruitment and office support services. The company provides employee and employer services such as Hays Talent Solutions, Hays Executive, and Hays Oil and Gas. It operates through the following segments: Asia Pacific; Continental Europe and Rest of World; and United Kingdom and Ireland. Hays was founded by Denis R. Waxman in 1969 and is headquartered in London, the United Kingdom.

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