(ASGN - Free Report
) is feeling
the impact of a bad jobs number coming after an earnings miss.
Today, its the this Zacks Rank #5 (Strong Sell) stock is the
Bear of the Day.
Earnings Report History
Over the last several quarters, ASGN has been a very reliable
company. They beat the Zacks Consensus Estimate in five of the
last six quarters. The most recent quarter will be discussed
below, but let's just say that the stock dropped 11.5% in the
session following the report.
Estimates Move Lower
After estimates had held still for some time at $1.23, they moved
lower after the earnings miss. The 2013 Zacks Consensus Estimate
moved to $1.06. At the same time, estimates for 2014 have also
come down from $1.43 to $1.31.
On Assignment is a staffing company for higher end jobs. The
company recently noted that it was selling its nursing business
line, and that was the major reason for estimates turning lower.
ASGN Misses Estimates In Most Recent Quarter
In the most recent quarter the company posted a negative earnings
surprise. ASGN reported $0.21 when the Zacks Consensus Estimate
was calling for $0.28. That $0.07 miss translates into a 25%
negative earnings surprise.
While the stock traded lower following the poor report, investors
were more or less willing to look the other way. The valuation
is mostly back where it was before the report, with a slight
premium being given to both PE multiples. The forward PE for ASGN
is 22.7x compared to the 17.8x industry average. The other
multiples have ASGN trading at a discount to the industry
average. The price to book is 2.4x while the industry average is
2.8x and the price to sales multiple of 1x is below the 2x
The price and consensus chart for ASGN shows how the recent miss and sale of a business line can impact the earnings. The impact of the recent weaker jobs report cannot really be seen on this chart, but we do see where the valuation might be getting somewhat high. Generally speaking, when the stock price is above the earnings estimate lines, then the stock is likely overvalued.
Brian Bolan is a Stock Strategist
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