Recruiter Hays (GB:HAS) posted a 32% increase in its full-year fees of £1.18 billion in its preliminary results for 2022, reporting its highest ever growth of 128% in its operating profits to £210 million.
The results were mainly driven by solid fee growth, booming demand for staff, improved fee margins, higher average salaries, and wage inflation.
Among its regions, Germany saw a record jump of 34% in its fees and 152% in operating profits. The company’s largest business segment of temp and contracting services pushed the growth in the region.
Net cash generation of £296.2 million gave the company confidence to reward shareholders better. The full-year dividend is at 2.85p, which is 134% higher than in 2021, and it announced a special dividend at 7.34p per share. The company is also returning cash to shareholders with a £75 million buyback program.
With such growth in dividends, the yield is at 9.25% as compared to the industry average of 0.54%.
Shares immediately rose by 7% to 122p after the announcement of the results and then settled at 117p. The stock’s performance has previously been sluggish, with the share price down by 25% in the last year. Investors are expecting to see a turnaround in the share prices as now the company is strategically placed to benefit from the job market situation.
What does Hays do?
Hays provides recruitment services in 33 countries in 20 different areas of specialsation. The company’s services include temporary, contractual, as well as permanent jobs in private and public sector companies.
Hays’ largest area is technology, which contributes most to its total fees.
What are the experts saying?
Victoria Scholar, head of investment at Interactive Investor, said, “Despite concerns about a UK recession, the recruitment business is still faring extremely well, thanks to strength in the underlying labour market, skill shortages, and historically high unfilled job vacancies in the economy. Hays is well positioned to benefit from the mismatch between demand and supply of labour across the UK jobs market.”
Hays’ share price forecast
According to TipRanks’ analyst rating consensus, Hays’ stock is a Strong Buy. It has five Buy ratings and one Hold rating.
The HAS target price is 166p, which represents a 41.8% change in the price from the current level. The price has a high and a low forecast of 200p and 125p, respectively.
Conclusion
With a strong recovery in the company’s profit, the outlook is positive. The company also remains committed to generating more returns for its shareholders, which makes the stock attractive for income investors.
