Our first recommendation—a staffing company—beat earnings estimates last quarter by six cents. The company will announce quarterly earnings on February 17, with a forecasted $0.74 per share. Our second recommendation is a Sell of a stock whose earnings are not growing as quickly as estimated.
Buy: On Assignment (ASGN)
From Upside
On Assignment (ASGN) does not operate in a capital intensive industry. The staffing firm helps place highly skilled professionals in the technology, engineering, and life-sciences sectors.
Nevertheless, prudent investments have helped drive sales and profit growth. Capital spending, used mostly to purchase property and equipment, was up 28% to $24 million in the 12 months ended September. During that span, cash flow hit $115 million, up 10%.
The stock earns an Overall score of 92, with above-average scores in five of the six categories.
On Assignment is benefiting from strong demand and market-share gains, as many corporate human-resource departments have seen cuts in recent years. A tight U.S. labor market has fueled solid demand. Aided by favorable pricing, profit margins have expanded in recent quarters.
Analyst estimates have moved higher over the last two months, as reflected by an Earnings Estimates score of 94. Consensus estimates project per-share earnings of $3.16 for 2016, up 22%. On Assignment is a Best Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, January 2016