Temporary Employment Trends Favor On Assignment, Inc. (ASGN)

Page 1 of 2

A temp agency that can supply workers who possess rare skills that employers need has a valuable competitive advantage right now. On Assignment, Inc. (NYSE:ASGN) provides scientists, engineers, IT professionals, and health care professionals to its clients. The company does compete with established temp agencies that have moved beyond their traditional specialties such as providing production line workers and low level clerical staff. On Assignment benefits from both recent growth in the temp worker market and a trend toward temp employment in fields that once used more salaried staff, although it’s not a cheap stock at the moment.

On Assignment, Inc. (NYSE:ASGN)Temp Market

On Assignment delivered especially strong recent results because of higher demand for specialized temporary professionals, as the company reported 139.1% sales growth and 124.4% earnings growth in its latest quarter. On Assignment’s IT and Engineering division provided 44.7% percent of its sales in 2011, according to the company’s 2011 annual report. The company’s Healthcare division provided 15.8% of its sales that year, while its Life Sciences division produced 26% of its sales and its Physician division provided 13.5% of its sales.

Robert Half International Inc. (NYSE:RHI) also demonstrated the power of a good niche recently, as the temp agency reported 37.5% higher income for the quarter driven by 6.2% higher sales. Robert Half has a particularly strong presence in accounting, auditing, and related fields, although the company supplies temps who have a wide variety of skill sets. All temp agencies have a cyclical advantage right now, because employers that need to add staff remain wary about another downturn.

Robert Half provides some evidence that this business cycle could turn out even better than past cycles for temp agencies. The 4Q 2012 Robert Half earnings call transcript at Morningstar explains that temp jobs now make up 13.2% of jobs in the United States, but in the recovery period after the last recession temp jobs made up 6.5% of total United States jobs. These figures definitely look good for On Assignment’s growth prospects.

Growth Rates

On Assignment experienced accelerating growth in 2012. The temp agency achieved 36.3% sales growth over the last year, much faster than its five year growth rate of 6.4%. Other temp agencies also experienced better recent results. Robert Half achieved 19% sales growth in the last year, but over the past five years the company has a negative 4.1% sales growth rate. Manpower Inc (NYSE:MAN) also had a better year in 2012, achieving a one year sales growth rate of 16.6% and a five year growth rate of 0.8%. These temp agencies’ historical growth rates don’t justify huge premiums, though. The bull case for On Assignment depends on growing markets for temporary scientific, medical, and IT professionals, although the temp agency could also boost its income with higher margins.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!