A Wall Street Transcript Interview with Timothy McHugh, CFA, a Partner with William Blair & Company and a Global Services Analyst Specializing in the Consulting, HR Technology, Information Services and Staffing Sectors: Strong Secular Trends Underlying the Temporary Staffing Industry

Wall Street Transcript

67 WALL STREET, New York - January 24, 2014 - The Wall Street Transcript has just published its Staffing & Outsourcing Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Growth in Temporary Staffing Demand - Secular Trend Toward Temporary Staffing - Strong Demand for IT Staffing - BPO Market Trends - Healthy Demand in BPO Space - Cost-Cutting Measures - Steady Growth in Labor Market - Upside Potential in Staffing Sector

Companies include: Manpower Inc. (MAN), On Assignment Inc. (ASGN), Robert Half International Inc. (RHI), AMN Healthcare Services Inc. (AHS), Korn/Ferry International (KFY), Heidrick & Struggles Internati (HSII)

In the following excerpt from the Staffing & Outsourcing Services Report, an expert analyst discusses the outlook for the sector for investors and singles out his top picks for 2014:

TWST: Please start with a snapshot of your coverage universe.

Mr. McHugh: I cover a variety of sectors within broadly the business services sector, including more specifically information services, consulting, and what is relevant for today - staffing.

TWST: For the staffing names, what's the overall sentiment in that space right now? What's behind that, and how is it affecting valuations?

Mr. McHugh: I think broadly to summarize, the sentiment is positive. There's clearly a strong secular trend underlying the temporary staffing industry. I think it varies a little bit as you get into different vertical areas in terms of the strength, but certainly there are three overarching trends you've seen in the labor market the last year. One is secular growth in temporary staffing, as that industry is growing much faster than the overall labor market. Two is white-collar employment is growing faster than blue-collar employment, and that's also manifested in the growth rates of the different parts of the temp staffing industry.

Lastly, you have steady underlying - but not spectacular - growth in the overall labor market as we move forward. Those trends in general are positive for the sector. I think what you see in terms of the valuations on average are forward p/e ratios around 20 times. That's pretty consistent with what you see at the midpoint of an economic cycle, maybe a little bit above, but relatively consistent with what we would have seen in the past. I would generally expect it to hold around those levels, barring some sort of increased concern about the macro environment.

TWST: Are any client verticals experiencing particularly strong demand? Are there particular areas where clients are really spending money, so to speak?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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