Investment Column: Signs are positive for Michael Page
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Your support makes all the difference.Another bullish trading statement from Michael Page, the recruitment consultants, appeared to be one too many for the City yesterday. With second quarter revenues reported bang in the middle of analysts' expectations - at £52.3m - investors certainly could have been served up much worse news. Nevertheless, the stock tumbled almost 5 per cent.
Another bullish trading statement from Michael Page, the recruitment consultants, appeared to be one too many for the City yesterday. With second quarter revenues reported bang in the middle of analysts' expectations - at £52.3m - investors certainly could have been served up much worse news. Nevertheless, the stock tumbled almost 5 per cent.
It once again highlighted the rather curious and unpredictable nature of Page's share price, which appears increasingly detached from the company's bottom line, and more in sync with the UK economy.
Acting both as a gauge of health at the top end of the UK employment market, whilst remaining sensitive itself to movements amongst other UK employment indicators, it has been boosted by a string of increasingly positive economic news over the past 15 months.
Whenever its management has positive news to announce, however, its shares have a tendency to collapse. In February, after announcing a strong set of results for 2003, and predicting a prosperous 2004, the shares fell 6.5 per cent in a day.
On balance, the outlook for Page still looks good. There is more to come from the UK economy, and whilst conditions in continental Europe remain tough, the company's chief executive, Terry Benson, says the first signs of recovery are emerging. In Asia too, first half revenues were up strongly, with no signs of cooling off just yet.
The problem for investors in the recent past has been the company's high valuation. In August last year, when shares were marginally lower than they are now, trading at 40 times 2003 predicted earnings, this column advised investors to sell. Since then profit forecasts for the current year have increased and the share price has not moved on significantly, bringing the stock to a more reasonable valuation of 20 times 2004 profits.
At 171p, Page's shares don't look cheap, but investors can feel much more comfortable hanging in there. For those who are looking to buy, there may be better opportunities yet. Hold.
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