Inspired by its appearance on my screen for cheap growing companies, I have recently bought a small position in this blue-collar recruiter. On the surface, an EV/EBITDA of 3 looks too low for a business forecast to grow earnings by 25% this year. However, they operate in a difficult sector and have faced several challenges in the past. Our shorter stock pitch format is the ideal way to determine whether I've made a mistake or should add to my initial position.
Disclosure: At the time of publication, I hold a long position in Staffline Group.
The Pitch
Staffline (LON:STAF) is an AIM-listed blue-collar recruitment business, and the UK's largest on-site staffing provider, typically placing around 40,000 temporary workers per day across food production, logistics, manufacturing, and driving. The group operates two divisions:
- Recruitment GB is the bulk of the group, generating over £1bn of revenue in the last year. It provides temporary blue-collar workers to a defensively positioned customer base, heavily weighted towards food retail and logistics. The business is the largest on-site recruitment company in its market, with its scale providing a moat in an industry where compliance matters.
- Recruitment Ireland contributed £102.1m of revenue in FY25, providing both temporary and permanent white-collar recruitment services. It holds the largest market share in Northern Ireland, over 20%, and is well positioned in the public sector, including health and social care.
The Stockopedia algorithms rate this as a Super Stock with a StockRank of 86.
- Value Rank 82: It is undoubtedly cheap on a single-digit P/E, but the lack of tangible asset backing and dividends means it doesn't score more highly on this measure.
- Quality Rank 62: While its turnover is large, tiny EBIT margins reflect that much of that is pass-through wage costs. High asset turnover means that the company still generated an impressive 31% ROCE last year, well above its cost of capital.
- Momentum Rank 68: This has been declining recently as the share price has fallen around 25% from its 52-week high. However, fundamental momentum remains strong, with 2025 results coming in ahead of expectations and modest upgrades for future years.
The Big Picture
Staffline is potentially misunderstood by many investors who categorise it with recruiters such as Hays or Page. There is no doubt that permanent white-collar recruitment has been a terrible place to be over the past…
