Temporary Staffing Experiences Secular Growth

The temporary staffing sector is experiencing secular growth, as businesses increasingly turn to temporary staffing to control costs and make work forces more flexible, says William Blair & Company Analyst Timothy McHugh.

“This is driven in part by the swings in the economy over the last five to 10 years, some of the changes to benefits programs, such as health care, that are driving up with the cost of full-time employees,” McHugh said.

McHugh points to Robert Half International (RHI) and Manpower (MAN) as two of the higher-quality temporary staffing firms, and he says they still trade at revenue multiples that are 20% to 30% below 2004 to 2006 levels.

“I think both of them are well-run franchises that are gaining share, are likely to deliver solid revenue growth during the next few years and are trading at revenue multiples that are below normal midcycle levels for them,” McHugh said.