51job Inc. - Momentum

51job Inc. (JOBS) recently hit a new multi-year high after reporting solid Q2 results on Aug 5 that contained 36% sales growth from last year. Estimates have since jumped higher for this Zacks #1 rank stock, with the next-year estimate now projecting 32% growth.

Company Description

51job, Inc. provides integrated human resources services such as staffing and financial planning in China. The company was founded in 1998 and has a market cap of $720 million.

China has been one of the few bright spots of the global economy over the last two years, posting awesome GDP growth in the face of major headwinds. That strong growth trajectory helped 51Job produce record second-quarter results, reported on Aug 5.

Second-Quarter Results

Revenue for the period was up 36% from last year to $39 million. Earnings were in line with the Zacks Consensus Estimate at 29 cents, moving the company's average earnings surprise to 81% over the last four quarters.

The company saw its biggest revenue gains in its online recruiting services, where revenue was up 74% from last year to $20 million. Its "other" human resources related services was up 15% to $8.3 million.

Not only did 51Job experience awesome sales growth during the quarter, it also effectively managed costs, with gross margin expanding to 68% from 60% and operating income more than doubling from last year.

Balance Sheet

51Job also continues to strengthen its balance sheet, with cash and equivalents up $24 million from last year to $158 million against no debt.

Estimates

The good quarter had a big impact on estimates, with the current year adding 28 cents to $1.08 and the next year adding 38 cents to $1.43, a bullish 32% growth projection.

Valuation

After the recent string of gains, JOBS does look a bit pricey, trading with a forward P/E multiple of 24X compared to its peers 13X.

12-Month Chart

JOBS jumped higher ahead of the quarterly report, recently hitting a new multi-year high above $27. Look for support from the trend line and previous breakout area on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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