Renowned human resource company SEEK Ltd [ASX:SEK] is on fire today.
The stock is currently up 7.09% at time of writing, booming on the back of the release of their half-year results. These figures have proved that the online job platform still has a lot of growth left to give.
So let’s take a closer look at what management had to share…
Strong margins continue to bolster SEEK’s profit
With a $10.5 billion market cap, it seems improbable to maintain the kind of growth that SEEK has experienced. After all, this isn’t a new company. They’ve been listed on the ASX since 2005.
Despite that, though, the platform continues to go from strength to strength — enjoying a hefty appreciation during the pandemic years, like many tech stocks.
Today, SEEK has shown that that trend hasn’t ended.
Revenue for the first half of FY22 was up 59% to $517.2 million. Similarly, earnings also improved by 83%, swelling to $250.6 million. All of which helped deliver a 32% increase in net profit for a final sum of $88.1 million.
The big takeaway from these numbers, in our view, has to be the frankly incredible margins. SEEK is extracting nearly 50 cents of earnings out of every dollar of revenue. That’s a stat that most businesses would be very envious of.
And while SEEK also reinvests a lot of these earnings in the business, that is no doubt helping further their growth ambitions. As CEO Ian Narev comments himself:
‘Our key markets are experiencing, to varying degrees, a combination of ongoing economic recovery, relatively low unemployment rates and continued restrictions on labour mobility. Job ad volumes and depth adoption remain high.
‘Our guidance also assumes a continuation of our accelerated investment from the first half, even if this limits further margin expansion this year. And in any event, we will continue to fund our long-term investment priorities. The progress we have made in this half on market metrics and core projects has again shown the benefits of consistent, through-the-cycle investment.’
What’s next for SEEK?
With the first half of the financial year done and dusted, SEEK is in a great spot. All management needs to do is keep doing what is working and continue to capitalise on the opportunities that come their way.
It seems clear to us that they understand the cyclical nature of their business. And with unemployment closing in on record lows, they know they need to make the most of this booming jobs market.
As the company itself shared today, they have the chance to double their revenue in the next four years — a feat that would cement SEEK as a truly cutting-edge growth stock.
So investors will simply have to wait and see as to whether they can actually deliver…
But if you’re looking for stocks that consistently double revenues, earnings, and even profits — the best place to look is small-caps. These are tiny companies that have even greater growth potential than that of SEEK.
To find out more about these exciting investment ideas, check out our fintech report. It’s a detailed look at three of the best small-cap investments on offer for everyday investors right now.
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Regards,
Ryan Clarkson-Ledward,
For Money Morning
