Hays: A sign of rising economic confidence?

Hays is the FTSE’s top riser this morning, its shares +5.3% to trade their best since late February when the shares fell 4.5% from near 2018 highs after disappointing H1 results.

Hays: A sign of rising economic confidence?
 As it stands, the shares are building on recent positive momentum (they were already +7% from recent lows), pointing towards another test of January’s 206p best in nearly 16 years.
The surge comes after the company offered shareholders a brace of good news in this morning’s Q4 trading statement. Firstly,  net fees were a record, up a healthy 15% YoY on a like-for-like basis, accelerating from +10% in Q3 and +12% in H1. This came courtesy of 10%+ growth in over 70% of its markets, record fees booked in over 50%). Secondly, and likely more influential, is management expecting full-year operating profit to be marginally ahead of current market expectations (£241m).
The strong growth makes for a solid close to the year and boosts hopes that the trend continues into the new year. The new guidance is likely to lead analysts to tweak forecasts for this year, with a positive knock-on for future years. This could, in turn, see upgrades to both valuations and ratings.
The shadow of economic uncertainty may still be hovering over the UK, with Brexit looming, but the region still grew, albeit modestly (UK & Ireland +4% underlying). International growth (+18%) remains strong with Australia and Germany singled out. With conditions deemed positive in nearly all markets management says it will continue to invest in key growth areas (e.g. Germany, France, US).
Investors are clearly bullish on the outlook for staffing and recruitment, especially with 20% growth in Permanent staffing being almost twice that of Temporary (+11%), actually accelerating from 11% in Q3 and 15% in H1 while Temp remains stable (9-11%). This split suggests corporate confidence round the world, despite the threat of a trade wars. Might it even suggest that sentiment is improving?

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Tags: FTSE 100

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