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Hays

LSE:HAS
Snowflake Description

Flawless balance sheet with solid track record.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
HAS
LSE
£3B
Market Cap
  1. Home
  2. GB
  3. Commercial Services
2018/01/19
Company description

Hays plc operates as a specialist recruitment company in the Asia Pacific, Continental Europe, the United Kingdom, Ireland, and internationally. More info.


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  • Hays's last earnings update was 203 days ago.
SHARE PRICE
3 Month History
HAS
Industry
5yr Volatility vs Market

Value

 Is Hays undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Hays to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of Hays is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Hays's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Hays's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Hays is overvalued based on earnings compared to the GB Professional Services industry average.
  • Hays is overvalued based on earnings compared to the GB market.
Price based on expected Growth
Does Hays's expected growth come at a high price?
  • Hays is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Hays's assets?
  • Hays is overvalued based on assets compared to the GB Professional Services industry average.
X
Value checks
We assess Hays's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Professional Services industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Professional Services industry average (and greater than 0)? (1 check)
  5. Hays has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (13.42%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for Hays is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
£577

Terminal Value

Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = £165 × (1 + 1.49%) ÷ (8.3% – 1.49%)

Terminal value based on the Perpetuity Method where growth (g) = 1.49%:
£2,457

Present value of terminal value:
£1,649

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
£2,226 = £577 + £1,649

Value = Total value / Shares Outstanding (£2,226 / 1,451)

Discount to Share Price

Value per share:
£1.53

Current discount (share price of £2): -30.13%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.3% = 1.49% + (0.8 * 8.51%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value (£2,896,905,631).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.414 = 0.414 (1 + (1- 19%) (0.01%))

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 1.49% is from the 10 year government bond rate in GBP.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (8.51%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Hays expected to perform in the next 1 to 3 years based on estimates from 13 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
9.4%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Hays expected to grow at an attractive rate?
  • Hays's earnings growth is expected to exceed the low risk savings rate of 4.5%.
Growth vs Market Checks
  • Hays's earnings growth is positive but not above the GB market average.
  • Hays's revenue growth is expected to exceed the GB market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • Hays's earnings are expected to grow by 9.4% yearly, however this is not considered high growth (20% yearly).
  • Hays's revenue is expected to grow by 5.7% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Hays is expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be above 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current GB Professional Services industry average.
  • A decline in Hays's performance (ROE) is expected over the next 3 years.
X
Future performance checks
We assess Hays's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the GB market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the GB market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Hays has a total score of 3/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Hays performed over the past 5 years?

  • Hays's last earnings update was 203 days ago.
The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Hays's growth in the last year to its industry (Professional Services).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Hays's year on year earnings growth rate has been positive on average over the past 5 years.
  • Hays's 1 year earnings growth exceeds its 5 year annual average (14.9% vs 11.2%)
  • Hays's earnings growth has exceeded the GB Professional Services industry average in the past year (14.9% vs 3.5%).
Earnings and Revenue History
Hays's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Strong return on shareholders funds (ROE > 20%) last year.
  • Hays performed above the GB Professional Services industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has been diminishing over 3 years.
X
Past performance checks
We assess Hays's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Professional Services industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Hays has a total score of 5/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Hays's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Hays's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Hays is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Hays's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Hays's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Total debt is covered by total short term assets, assets are 2550.5x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • Hays's level of debt (0.1% of total debt) compared to net worth is satisfactory (less than 40%).
  • The level of debt compared to net worth has been reduced over the past 5 years (90.7% vs 0.1% today).
  • Total debt is well covered by annual operating cash flow (33500%, greater than 20% of total debt).
  • Interest on debt is well covered by earnings (EBIT is 52.2x coverage).
X
Financial health checks
We assess Hays's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Hays has a total score of 6/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Hays's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
1.61%
Current annual income from Hays dividends. Estimated to be 3.13% next year.
If you bought £2,000 of Hays shares you are expected to receive £32 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying below low risk savings rate (2.3%).
  • Paying below markets top dividend payers (3.98%).
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Dividends per share have been volatile in the past 10 years (annual drop of over 20%).
  • Dividends per share have fallen over the past 10 years.
Current Payout to shareholders
What portion of Hays's earnings are paid to the shareholders as a dividend.
  • Dividends paid are well covered by net profit (3x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be covered by net profit (1.9x coverage).
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Income/ dividend checks
We assess Hays's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Hays afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Hays has a total score of 2/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Hays's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Alistair Cox, image provided by Google.
Alistair Cox
COMPENSATION £2,866,000
AGE 56
TENURE AS CEO 10.2 years
CEO Bio

Mr. Alistair Richard Cox has been the Chief Executive Officer of Hays plc since November 2007 and also has been its Executive Director since September 1, 2007. Mr. Cox served as the President of Lafarge Malaysia Berhad. He served as the Chief Executive Officer of Xansa PLC (now, Steria UK Corporate Ltd.) from August 2002 to June 4, 2007. He served as a Regional President of Asia, Lafarge and Group Strategy Director of Blue Circle (subsequently Lafarge) from 1994 to 2002 and McKinsey & Co from 1990 to 1994. He served as an Executive Officer of Hays plc since June 2007. An Engineer by background, his early business experience was with British Aerospace and Schlumberger in the United Kingdom and United States. He has been an Independent Non-Executive Director at JUST EAT plc since May 2, 2017. He serves as a Director of Hays Specialist Recruitment (Australia) Pty Limited New Zealand Branch. He served as a Non-Executive Director of 3i Group plc from October 2009 to November 10, 2015. He served as a Director of Steria UK Corporate Ltd. until June 2007. Mr. Cox is a Chartered Engineer and has an M.B.A. from the Stanford Business school in California. He holds a first class Honors Degree in Aeronautical Engineering from Salford University.

CEO Compensation
  • Alistair's compensation has been consistent with company performance over the past year.
  • Alistair's compensation is higher than average for a company of this size and profit level.
Management Team Tenure

Average tenure and age of the Hays management team in years:

7.7
Average Tenure
55.3
Average Age
  • The average tenure for the Hays management team is over 5 years, this suggests they are a seasoned and experienced team.
Management Team

Alistair Cox

TITLE
CEO & Executive Director
COMPENSATION
£3M
AGE
56
TENURE
10.2 yrs

Paul Venables

TITLE
Group Finance Director & Executive Director
COMPENSATION
£2M
AGE
56
TENURE
11.7 yrs

David Walker

TITLE
Head of Investor Relations

Doug Evans

TITLE
Company Secretary & General Counsel
AGE
54
TENURE
4.9 yrs

Sholto Douglas-Home

TITLE
Chief Marketing Officer
TENURE
9.8 yrs

Tina Ling

TITLE
Managing Director of France and Benelux

Nick Cox

TITLE
Managing Director of Continental Europe & Rest of World

Simon Winfield

TITLE
Managing Director of West & Wales
TENURE
4.2 yrs

Nigel Heap

TITLE
Uk & Ireland Managing Director and Chairman of the Asia Pacific Business
TENURE
5.8 yrs

Christine Wright

TITLE
Managing Director of Asia
Board of Directors Tenure

Average tenure and age of the Hays board of directors in years:

5.1
Average Tenure
58
Average Age
  • The tenure for the Hays board of directors is about average.
Board of Directors

Alan Thomson

TITLE
Non-Executive Chairman
COMPENSATION
£250K
AGE
70
TENURE
7.2 yrs

Alistair Cox

TITLE
CEO & Executive Director
COMPENSATION
£3M
AGE
56
TENURE
10.3 yrs

Paul Venables

TITLE
Group Finance Director & Executive Director
COMPENSATION
£2M
AGE
56
TENURE
11.7 yrs

Vicky Jarman

TITLE
Independent Non-Executive Director
COMPENSATION
£67K
AGE
45
TENURE
6.3 yrs

Susan Murray

TITLE
Independent Non-Executive Director
AGE
59
TENURE
0.5 yrs

Andy Martin

TITLE
Senior Independent Non-Executive Director
AGE
57
TENURE
0.2 yrs

Torsten Kreindl

TITLE
Independent Non-Executive Director
COMPENSATION
£55K
AGE
54
TENURE
4.6 yrs

Peter Williams

TITLE
Independent Non-Executive Director
COMPENSATION
£55K
AGE
64
TENURE
2.9 yrs

MT Rainey

TITLE
Independent Non-Executive Director
COMPENSATION
£55K
AGE
61
TENURE
2.1 yrs
Recent Insider Trading
  • No 3 month insider trading information.
Who owns this company?
X
Management checks
We assess Hays's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Hays has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

External News
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Simply Wall St News

What Should We Expect From Hays plc's (LON:HAS) Earnings Over The Next Few Years?

Investors may find it useful to understand how market analysts perceive Hays's earnings growth outlook over the next few years and whether the future looks even brighter than the past. … Check out our latest analysis for Hays Market analysts' consensus outlook for this coming year seems optimistic, with earnings expanding by a robust 13.22%. … The slope of this line is the rate of earnings growth, which in this case is 8.17%.

Simply Wall St -

What Is Hays plc's (LON:HAS) Share Price Doing?

If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range. … Hays’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. … If you believe Hays should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable.

Simply Wall St -

Hays plc (LSE:HAS) Delivered A Better ROE Than The Industry, Here’s Why

Return on Equity = Net Profit ÷ Shareholders Equity Returns are usually compared to costs to measure the efficiency of capital. … ROE can be dissected into three distinct ratios: net profit margin, asset turnover, and financial leverage. … This is called the Dupont Formula: Dupont Formula ROE = profit margin × asset turnover × financial leverage ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = annual net profit ÷ shareholders’ equity LSE:HAS Last Perf Oct 31st 17 Basically, profit margin measures how much of revenue trickles down into earnings which illustrates how efficient HAS is with its cost management.

Simply Wall St -

Company Info

Map
Description

Hays plc operates as a specialist recruitment company in the Asia Pacific, Continental Europe, the United Kingdom, Ireland, and internationally. The company offers permanent, temporary, and contractor recruitment services, such as qualified, professional, and skilled recruitment to public and private sector. It specializes in offering recruitment services in the areas of accountancy and finance, construction and property, information technology, life sciences, sales and marketing, banking and capital markets, contact centers, education, engineering and manufacturing, executive, financial services, health and social care, human resources, legal, office professionals, energy, oil and gas, purchasing, retail, resources and mining, and telecoms. Hays plc was founded in 1969 and is headquartered in London, the United Kingdom.

Details
Name: Hays plc
HAS
Exchange: LSE
Founded: 1969
£2,896,905,631
1,450,628,759
Website: http://www.haysplc.com
Address: Hays plc
250 Euston Road,
London,
Greater London, NW1 2AF,
United Kingdom
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
LSE HAS Ordinary Shares London Stock Exchange GB GBP 02. Jan 1992
OTCPK HAYP.F Ordinary Shares Pink Sheets LLC US USD 02. Jan 1992
DB HAY Ordinary Shares Deutsche Boerse AG DE EUR 02. Jan 1992
BATS-CHIXE HASL Ordinary Shares BATS 'Chi-X Europe' GB GBP 02. Jan 1992
OTCPK HAYP.Y ADR Pink Sheets LLC US USD 17. Feb 2010
Number of employees
Current staff
Staff numbers
10,000
Hays employees.
Industry
Human Resource and Employment Services
Commercial Services
Company Analysis and Financial Data Status
Area Date
Company Analysis updated: 2018/01/19
Last estimates confirmation: 2018/01/17
Last earnings update: 2017/06/30
Last annual earnings update: 2017/06/30


All dates in UTC. All financial data provided by Standard & Poor’s Capital IQ.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.