PageGroup (LSE: PAGE) is a share I have long had my eye on, and would be happy to splash the readies on, given its bright profits and dividend prospects.
You see, the recruitment specialist has cast its net far and wide and this global strategy is delivering exceptional revenues growth in spite of difficulties in its home marketplace. The FTSE 250 stock has seen its share price shoot 16% higher since the turn of 2018, helped by blockbuster full-year results released in January, and strong trading details since then assure me that additional gains can be expected.
Foreign territories still ripping along
PageGroup carried on as usual in April by declaring that, “with market sentiment continuing to be weak,” gross revenues in the UK fell 7.1% during January-March, although the unfavourable timing of Easter and tough year-on-year comparatives also played their part in taking a bite out of the top line.
Regardless, the latest release confirmed the stunning progress it is making on foreign shores, where roaring sales growth in these destinations helped deliver record group gross revenues of £187.7m in the first quarter, up 12.1% at constant currencies from the comparable 2017 period.
In its Europe, Middle East and Africa (EMEA) territory, it saw gross revenues booming 18.2% at stable exchange rates, led by the continental engine rooms of Germany and France, where revenues jumped 28% and 18% respectively.
And the business also made further inroads into its bright emerging markets. In Asia, Pacific gross revenues rose 13.8% at constant currencies, while recovering economic conditions in Brazil helped comparable turnover in The Americas leap 20.4%.
Expansion strategy delivering the goods
And PageGroup continues to grow its employee base to lay the groundwork for sales to continue streaming in. In the first quarter, the company added 183 fee earners to take the total headcount to a new record above 7,300. What’s more, these new staffers were added “primarily into our large, high-potential markets, as well as businesses where growth was strongest,” the firm said.
It should therefore not surprise you that the City expects profits to keep tearing skywards, and broker consensus points to bottom-line growth of 16% in 2018 and 9% next year.
Not only do these projections result in a dirt-cheap forward PEG ratio of 1.1 — roughly in line with the accepted bargain terrain of 1 or below — but they lead to expectations of more impressive dividend increases toowith more special dividends on the cards. And why not? After all, PageGroup’s’ balance sheet also remains robust, and the business had net cash on its books of £91m as of March versus £86m 12 months previously.
Last year’s reward of 25.2p per share is predicted to rise to 27.3p in the current period, before shooting to 29.1p in 2019. This means that yields rock in at a massive 5.1% and 5.4% for this year and next respectively. And I reckon investors can bank on yields continuing to outstrip those of the broader market long into the future.
