LSE:STEM

Stock Analysis Report

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Market Cap

UK£597.8m

Last Updated

2021/06/23 02:37 UTC

Data Sources

Company Financials +

Executive Summary

SThree plc provides specialist contract and permanent staffing services for technology, engineering, life sciences, banking and finance, and other sectors. More Details


Snowflake Analysis

Flawless balance sheet with high growth potential.


Similar Companies

Share Price & News

How has SThree's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: STEM is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: STEM's weekly volatility (4%) has been stable over the past year.


Market Performance


7 Day Return

-2.1%

STEM

0.2%

GB Professional Services

-1.2%

GB Market


1 Year Return

66.2%

STEM

6.1%

GB Professional Services

17.8%

GB Market

Return vs Industry: STEM exceeded the UK Professional Services industry which returned 4.1% over the past year.

Return vs Market: STEM exceeded the UK Market which returned 16.7% over the past year.


Shareholder returns

STEMIndustryMarket
7 Day-2.1%0.2%-1.2%
30 Day13.6%1.3%0.7%
90 Day20.8%7.9%6.6%
1 Year68.4%66.2%8.1%6.1%23.4%17.8%
3 Year35.7%25.5%30.3%22.4%14.2%1.2%
5 Year127.3%92.2%82.4%63.8%53.2%24.3%

Long-Term Price Volatility Vs. Market

How volatile is SThree's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is SThree undervalued compared to its fair value and its price relative to the market?

32.07x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: STEM (£4.56) is trading above our estimate of fair value (£4.03)

Significantly Below Fair Value: STEM is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: STEM is good value based on its PE Ratio (32.1x) compared to the UK Professional Services industry average (36.4x).

PE vs Market: STEM is poor value based on its PE Ratio (32.1x) compared to the UK market (24.9x).


Price to Earnings Growth Ratio

PEG Ratio: STEM is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: STEM is overvalued based on its PB Ratio (4.7x) compared to the GB Professional Services industry average (3.1x).


Future Growth

How is SThree forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

24.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: STEM's forecast earnings growth (24.5% per year) is above the savings rate (0.9%).

Earnings vs Market: STEM's earnings (24.5% per year) are forecast to grow faster than the UK market (17.7% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: STEM's revenue (7.2% per year) is forecast to grow faster than the UK market (5.3% per year).

High Growth Revenue: STEM's revenue (7.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: STEM's Return on Equity is forecast to be high in 3 years time (25.9%)


Past Performance

How has SThree performed over the past 5 years?

5.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: STEM has high quality earnings.

Growing Profit Margin: STEM's current net profit margins (1.6%) are lower than last year (3.1%).


Past Earnings Growth Analysis

Earnings Trend: STEM's earnings have grown by 5.1% per year over the past 5 years.

Accelerating Growth: STEM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: STEM had negative earnings growth (-54.5%) over the past year, making it difficult to compare to the Professional Services industry average (-10.4%).


Return on Equity

High ROE: STEM's Return on Equity (14.6%) is considered low.


Financial Health

How is SThree's financial position?


Financial Position Analysis

Short Term Liabilities: STEM's short term assets (£287.8M) exceed its short term liabilities (£180.0M).

Long Term Liabilities: STEM's short term assets (£287.8M) exceed its long term liabilities (£26.0M).


Debt to Equity History and Analysis

Debt Level: STEM's debt to equity ratio (0.4%) is considered satisfactory.

Reducing Debt: STEM's debt to equity ratio has reduced from 33.7% to 0.4% over the past 5 years.

Debt Coverage: STEM's debt is well covered by operating cash flow (14210%).

Interest Coverage: STEM's interest payments on its debt are well covered by EBIT (31.7x coverage).


Balance Sheet


Dividend

What is SThree current dividend yield, its reliability and sustainability?

1.10%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: STEM's dividend (1.1%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.29%).

High Dividend: STEM's dividend (1.1%) is low compared to the top 25% of dividend payers in the UK market (4.04%).


Stability and Growth of Payments

Stable Dividend: STEM's dividend payments have been volatile in the past 10 years.

Growing Dividend: STEM's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (35.2%), STEM's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: STEM's dividends in 3 years are forecast to be well covered by earnings (42.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.4yrs

Average management tenure


CEO

Mark Dorman (49 yo)

2.25yrs

Tenure

UK£500,200

Compensation

Mr. Mark Dorman has been Chief Executive Officer and Executive Director of SThree Plc since March 18, 2019. He served as President of Higher Education, Professional & International at McGraw-Hill Global Ed...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD696.14K) is about average for companies of similar size in the UK market ($USD972.82K).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: STEM's management team is considered experienced (4.4 years average tenure).


Board Members

Experienced Board: STEM's board of directors are considered experienced (3.5 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

SThree plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: SThree plc
  • Ticker: STEM
  • Exchange: LSE
  • Founded: 1986
  • Industry: Human Resource and Employment Services
  • Sector: Commercial Services
  • Market Cap: UK£597.816m
  • Shares outstanding: 131.24m
  • Website: https://www.sthree.com

Number of Employees


Location

  • SThree plc
  • 75 King William Street
  • 1st Floor
  • London
  • Greater London
  • EC4N 7BE
  • United Kingdom

Listings


Biography

SThree plc provides specialist contract and permanent staffing services for technology, engineering, life sciences, banking and finance, and other sectors. It offers permanent, contract, project, retained,...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/06/23 02:37
End of Day Share Price2021/06/22 00:00
Earnings2020/11/30
Annual Earnings2020/11/30


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.