This week, on a technical level (by technical, we mean looking at the chart, the position of the price and reading market sentiment), it was clear we were due some red days due to the extension of price away from the moving averages in the technology sector, particularly the Nasdaq 100. I would feel uncomfortable shorting (betting on the price to go down) as the sector is still trending up comfortably.
What amazes me is that on predicted red days, this brings more bad news, or more emphasis is put on bad news. Is this a coincidence? News outlets such as CNBC and Bloomberg seem to look at the market’s direction on a particular day and decide whether to book a bullish or bearish commentator. Even the Macroeconomic news is hyped up more by the technical levels. The ISM Services data released this week was under what was expected, showing a cooling economy (I thought that was what was wanted), but more of a negative emphasis was put on the data as the market pulled back. That data will be viewed positively when the market has a green day. If trading short-term, attention should be given to the macroeconomic data, but as a long-term investor, this should not matter.
I find that sometimes technicals are stronger than fundamentals. Bad news affects the market briefly before the price continues in its planned direction. I have lost money in the past because the data and the media scared me out of the market. If I had read the chart, it would have been clear that my fear was unjustified. Don’t take this as any advice. After reading charts and data daily for years, you too may come up with your theories but test to understand the market and develop a strategy.
As it is the school holidays and Easter this week, I have been caught up with family ties but still make time each day to read the company news and scan my charts to see if anything interests me.
Going into recession, I have found that recruitment is the worst sector to be involved with. The industry has a lagging effect and looks rosy up to a point. Layoffs and hirings stop well after a recession has started, which doesn’t justify analysts looking at the economy and stating that there is no recession due to the high workforce.
Robert Walters
Robert Walters is a founder lead, well-run company in the recruitment sector, it has been on my watch list for some time, but now, with the valuation down to the lowest levels I’ve seen in years, I thought I’d take a look.
The Robert Walters Group is a market-leading international specialist professional recruitment group. With over 4,400 staff spanning 31 countries, the company delivers expert recruitment consultancy, staffing, recruitment process outsourcing and managed services across the globe. Their client base ranges from leading blue-chip corporates and financial services organisations to SMEs and start-ups.
Robert Walters released a first-quarter trading update this week, which saw the price fall by 5%. But after reading, I felt slightly optimistic, and the fears from the company in their annual report didn’t seem as prominent.
As expected, revenue came in flat from a record year prior, but the company gave the impression that they could be light at the end of the economic tunnel.
Vacancy levels are still strong and competition fierce, but as I stated above, this could change the deeper we go into an economic slowdown. The chart clearly shows the sentiment and worries of investors with uncertainty going forward in the market. Still, Robert Walters ensures us that they have the experience to deal with any situation. The company has no debt and £70m in cash.
The company stills see strength for now, expanding into Italy and opening new offices in various locations globally. They have also created 49 news teams to work with the growing tech sector.
The strongest areas for revenue are Spain, Netherlands, and France. The UK, especially London, has seen a slowdown, as has Asia, with the Chinese lockdown affecting sales. These lockdowns have been lifted, and China is predicted to return to normality and may grow quickly.
Reading the chart of companies such as Robert Walters, I can quickly identify every recession and economic downturn, and with hindsight, say to myself, “I wish I had bought there”. We must ask ourselves, “Why should this time be any different?”.
Analysts see a slowdown in the recruitment sector for the next year, before a big boost of rehiring after a recession and have estimated revenue growing 28% to £1413m and an EPS of 70p by 2025. Based on net margins coming in slightly softer, I have been more conservative in my estimated EPS 35p-40p.
The Price to Earnings Ratio measures confidence in the company and the overall market. The PE of Robert Walters fluctuates with market sentiment. When worries of recession loom, RWA trades with a PE of around 8-10x. With such economic woes firmly behind the company, sentiment increases with a PE reaching around 15x – 25x.
In the hope or expectation that we will see all this behind us in 2025, I will use a PE of 15x for my estimate.
The Analysts, with their estimates, could see a price of 1050p, a 145% increase. My more conservative estimate gives me a price of 560p – 600p, a 40% increase. It’s good that even my worst-case scenario stills sees a 40% upside. Let’s hope the analysts have it right.
Simply Wall Street, an excellent resource for research stocks (not sponsored), also shows a fair value of £17.51p
The price of RWA is still trending down and could fall more yet, but no one can predict a bottom in price. The PE Ratio is the lowest the company has seen since 2013, and now could be a good time to average in preparation for that recovery. One must prepare to handle more price declines but keep confidence that the overall sector will bounce back as it has done for recession after recession for many years.
One other thing to point out is that the CEO and founder, Robert Walters, is stepping down due to retirement on the 27th of April, it is usually not good to see a founder walk away from a company they have built to what it is, but we are assured the company is left in good hands with the successor being Toby Fowlston. Toby has been with Robert Walters since 1999, so he should know how everything works. Let’s hope that Mr Walters has modelled the new CEO into his image and that RWA can carry on dominating the recruitment industry.
DISCLAIMER: I am not a financial advisor; this is not a financial advice website. This is a diary of my thoughts and mine alone. All information is provided strictly for educational and entertainment purposes. It does not consider anybody’s circumstances, situation, trading style or risk levels. If you are making an investment or other financial management decisions and feel you need guidance or advice, please consult a suitably qualified licensed professional. If interested in trading, please develop your strategy and research your own trades.
This week, on a technical level (by technical, we mean looking at the chart, the position of the price and reading market sentiment), it was clear we were due some red days due to the extension of price away from the moving averages in the technology sector, particularly the Nasdaq 100. I would feel uncomfortable shorting (betting on the price to go down) as the sector is still trending up comfortably.
What amazes me is that on predicted red days, this brings more bad news, or more emphasis is put on bad news. Is this a coincidence? News outlets such as CNBC and Bloomberg seem to look at the market’s direction on a particular day and decide whether to book a bullish or bearish commentator. Even the Macroeconomic news is hyped up more by the technical levels. The ISM Services data released this week was under what was expected, showing a cooling economy (I thought that was what was wanted), but more of a negative emphasis was put on the data as the market pulled back. That data will be viewed positively when the market has a green day. If trading short-term, attention should be given to the macroeconomic data, but as a long-term investor, this should not matter.
I find that sometimes technicals are stronger than fundamentals. Bad news affects the market briefly before the price continues in its planned direction. I have lost money in the past because the data and the media scared me out of the market. If I had read the chart, it would have been clear that my fear was unjustified. Don’t take this as any advice. After reading charts and data daily for years, you too may come up with your theories but test to understand the market and develop a strategy.
As it is the school holidays and Easter this week, I have been caught up with family ties but still make time each day to read the company news and scan my charts to see if anything interests me.
Going into recession, I have found that recruitment is the worst sector to be involved with. The industry has a lagging effect and looks rosy up to a point. Layoffs and hirings stop well after a recession has started, which doesn’t justify analysts looking at the economy and stating that there is no recession due to the high workforce.
Robert Walters
Robert Walters is a founder lead, well-run company in the recruitment sector, it has been on my watch list for some time, but now, with the valuation down to the lowest levels I’ve seen in years, I thought I’d take a look.
The Robert Walters Group is a market-leading international specialist professional recruitment group. With over 4,400 staff spanning 31 countries, the company delivers expert recruitment consultancy, staffing, recruitment process outsourcing and managed services across the globe. Their client base ranges from leading blue-chip corporates and financial services organisations to SMEs and start-ups.
Robert Walters released a first-quarter trading update this week, which saw the price fall by 5%. But after reading, I felt slightly optimistic, and the fears from the company in their annual report didn’t seem as prominent.
As expected, revenue came in flat from a record year prior, but the company gave the impression that they could be light at the end of the economic tunnel.
Vacancy levels are still strong and competition fierce, but as I stated above, this could change the deeper we go into an economic slowdown. The chart clearly shows the sentiment and worries of investors with uncertainty going forward in the market. Still, Robert Walters ensures us that they have the experience to deal with any situation. The company has no debt and £70m in cash.
The company stills see strength for now, expanding into Italy and opening new offices in various locations globally. They have also created 49 news teams to work with the growing tech sector.
The strongest areas for revenue are Spain, Netherlands, and France. The UK, especially London, has seen a slowdown, as has Asia, with the Chinese lockdown affecting sales. These lockdowns have been lifted, and China is predicted to return to normality and may grow quickly.
Reading the chart of companies such as Robert Walters, I can quickly identify every recession and economic downturn, and with hindsight, say to myself, “I wish I had bought there”. We must ask ourselves, “Why should this time be any different?”.
Analysts see a slowdown in the recruitment sector for the next year, before a big boost of rehiring after a recession and have estimated revenue growing 28% to £1413m and an EPS of 70p by 2025. Based on net margins coming in slightly softer, I have been more conservative in my estimated EPS 35p-40p.
The Price to Earnings Ratio measures confidence in the company and the overall market. The PE of Robert Walters fluctuates with market sentiment. When worries of recession loom, RWA trades with a PE of around 8-10x. With such economic woes firmly behind the company, sentiment increases with a PE reaching around 15x – 25x.
In the hope or expectation that we will see all this behind us in 2025, I will use a PE of 15x for my estimate.
The Analysts, with their estimates, could see a price of 1050p, a 145% increase. My more conservative estimate gives me a price of 560p – 600p, a 40% increase. It’s good that even my worst-case scenario stills sees a 40% upside. Let’s hope the analysts have it right.
Simply Wall Street, an excellent resource for research stocks (not sponsored), also shows a fair value of £17.51p
The price of RWA is still trending down and could fall more yet, but no one can predict a bottom in price. The PE Ratio is the lowest the company has seen since 2013, and now could be a good time to average in preparation for that recovery. One must prepare to handle more price declines but keep confidence that the overall sector will bounce back as it has done for recession after recession for many years.
One other thing to point out is that the CEO and founder, Robert Walters, is stepping down due to retirement on the 27th of April, it is usually not good to see a founder walk away from a company they have built to what it is, but we are assured the company is left in good hands with the successor being Toby Fowlston. Toby has been with Robert Walters since 1999, so he should know how everything works. Let’s hope that Mr Walters has modelled the new CEO into his image and that RWA can carry on dominating the recruitment industry.
DISCLAIMER: I am not a financial advisor; this is not a financial advice website. This is a diary of my thoughts and mine alone. All information is provided strictly for educational and entertainment purposes. It does not consider anybody’s circumstances, situation, trading style or risk levels. If you are making an investment or other financial management decisions and feel you need guidance or advice, please consult a suitably qualified licensed professional. If interested in trading, please develop your strategy and research your own trades.
