Is It Too Late To Consider Buying Randstad N.V. (AMS:RAND)?

Let's talk about the popular Randstad N.V. (AMS:RAND). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the ENXTAM. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Randstad’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Randstad

What Is Randstad Worth?

Great news for investors – Randstad is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Randstad’s ratio of 10.75x is below its peer average of 21.09x, which indicates the stock is trading at a lower price compared to the Professional Services industry. What’s more interesting is that, Randstad’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Randstad generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -16% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Randstad. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although RAND is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to RAND, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on RAND for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Randstad, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Randstad (of which 1 is significant!) you should know about.

If you are no longer interested in Randstad, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.