Casual investors often rely on what they hear is popular on Wall Street to choose their own investments. Thinking, “If it’s good enough for them, it’s good enough for me” is a reasonable rationale, and for the most part, it makes sense, the same way one might emulate doctors and athletes for medical or physical training tips. 

Breaking down the reasons for why Wall Street may like a particular stock is not rocket science. There are specific metrics that can be used to gauge a company’s past performance and anticipate future prospects. Is it a leader among its competitors? Are their profits sufficient to consistently pay dividends while still growing? Are they successfully adapting their business for  the challenges of the future posed by technology, geopolitical events, or other factors?

Human Resources consulting company Adecco Group AG (OTC: AHEXY) checks all of those boxes, and, not surprisingly, has received consistently positive analyst reviews.

Populating the Modern Workforce

Based in Zurich, Switzerland, Adecco Group is the second largest Human Resources staffing company in the world, behind Randstad NV (OTC: RANJY) of the Netherlands. By providing temporary and permanent skilled workers in a wide range of sectors, such as legal, financial, industrial, technical, and other office related occupations. Adecco continues to expand its consulting and outsourcing services by offering training, talent development, and career transition advice. 

Founded in 1997 from a merger between Adia of Lausanne, Switzerland and Ecco of Lyon, France, Adecco presently has 5,200 branches operating in 60 countries. Its stock trades on the SIX Swiss Exchange as ADEN, with American Depository Receipts, or ADRs trading on the OTC market in the US as AHEXY. 

Growth By Acquisition

Adecco’s growth into other countries replicated its successful formula of training workers for the digital era office with computer and communication skills that became prevalent thanks to PCs, the internet, and mobile phone technology. Some of its geographically strategic acquisitions to achieve this growth include:

• TAD Resources International (USA)
• DIS AG (Germany)
• Spring Group (UK)
• Fesco (JV in China)
• Drake Beam Morin, Inc. (USA)
• VSN, Inc. (Japan)
• Knightsbridge Human Capital Solutions (Canada)
• Penna Consulting, Plc (UK)

Analyst Consensus

Adecco stock is tracked by as many as 14 different analysts from firms like UBS, Deutsche Bank, and JP Morgan. Since a number of major firms have announced layoffs and cut back on staffing due to inflation and weaknesses in several sectors, especially in technology and financial, hiring has been impacted. As such, Adecco’s stock price has pulled back, although they have not failed to pay dividends as far back as 2009.

At the time of this writing, 75% of analysts have rated Adecco a “buy” or a “hold”.

Handling Future Threats and Challenges

 

Artificial Intelligence, or AI, has been expanding exponentially into all areas of creative, occupational, medical and other areas of endeavor. Adecco recently conducted a large survey of executives from over 2,000 companies, and 41% of them expected smaller future workforces due to AI being able to handle tasks presently assigned to employees. 

However, Adecco CEO Denis Machuel believes that AI will be a net job creator at the end of the day, and cited the following rationale for his opinion: He referenced that the fears from ten years ago that digital would destroy many jobs. However, an equivalent number of new jobs were subsequently created from the new technical demands created by digital and the requirements for trained personnel to make the necessary judgment calls. He believes a similar balance will be the case with AI as well.

In preparation for these kinds of challenges, Denis Machuel also announced that Adecco planned to train 17,000 refugees from Ukraine and place 85,000 of them in jobs throughout Europe, with 10,000 earmarked for Germany and the rest to nearby nations. 

Attraction For Investors

At the time of this writing, Adecco ADRs are trading at $16.87 per share. This is at the low end of its 52-week range, which is a low $14.77 and $24.70 at the high. At the present price, Adecco is yielding 8.34% in annual dividends. Analysts’ consensus 12-month price target for Adecco is CHF 37.50, which equates to USD 41.14.

 

 

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