According to a Labor Department report, the U.S. added 428,000 jobs in April, and the unemployment rate was unchanged at 3.6%, as the labor market remained vibrant. However, with further aggressive monetary policy tightening by the Fed increasing the likelihood of a recession, companies are warning of a hiring slowdown.
Due to multi-decade high inflation, the Russia-Ukraine war, intensified supply chain disruptions, and rising energy and commodity prices, major companies' revenue declined. So, many companies plan to freeze their hiring to contain their costs. This could mar the U.S. jobs recovery.
Given this backdrop, we think it may not make sense to invest in stuffing stocks Upwork Inc. (UPWK), ZipRecruiter, Inc. (ZIP), and Adecco Group AG (AHEXY) as they don’t possess sufficient fundamental strength and growth prospects. So, these stocks could be among the major losers in the near term.
Upwork Inc. (UPWK)
UPWK in Mountain View, Calif., operates an active marketplace that connects businesses with various independent professionals and agencies internationally. The company's work marketplace provides access to talent with multiple skills across multiple categories, including sales and marketing, customer service, data science and analytics, design and creative, web, mobile, and software development.
UPWK’s revenue increased 24% year-over-year to $141.30 million for its fiscal second quarter, ended March 31, 2022. However, its non-GAAP net loss came in at $3.50 million compared to $4.20 million in income in the year-ago period. Its non-GAAP loss per share for the quarter was $0.03 compared to an EPS of $0.03 in the prior year period.
The company’s revenue is expected to increase 24.4% year-over-year to $149.55 million for the quarter ending June 30, 2022. However, analysts expect UPWK’s EPS to decrease 366.7% for the quarter ending June 30, 2022, and fiscal 2022. The stock has declined 20.9% in price over the past month to close yesterday’s trading session at $16.50.
UPWK’s poor prospects are apparent in its POWR Ratings also. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has a D grade for Momentum. Click here to see the additional POWR ratings for UPWK (Quality, Growth, Value, Stability, and Sentiment). It is ranked #20 of 33 stocks in the F-rated Internet - Services industry.
ZipRecruiter, Inc. (ZIP)
ZIP in Santa Monica, Calif., operates a marketplace that connects job seekers and employers. Its platform is a two-sided marketplace that enables employers to post jobs and access other features, where job seekers can apply to jobs with a single click.
ZIP’s revenue increased 81% year-over-year to $227.26 million for its fiscal first quarter, ended March 31, 2022. However, its net income decreased 37.2% year-over-year to $8.42 million. In comparison, its EPS for the quarter came in at $0.07, down 30% year-over-year.
Analysts expect ZIP’s revenue to increase 23.4% year-over-year to $914.45 million in its fiscal year 2022. However, the company’s EPS is expected to decrease 82.4% year-over-year to $0.03 for the quarter ending Sept. 30, 2022. The stock has declined 18.4% in price over the past month to close yesterday’s trading session at $19.58.
ZIP’s weak fundamentals are reflected in its POWR Ratings. It has a D grade for Momentum and Stability.
Click here to see ZIP’s Growth, Value, Sentiment, and quality rating. ZIP is ranked #15 out of 18 stocks in the Outsourcing - Staffing Services industry.
Adecco Group AG (AHEXY)
Headquartered in Zurich, Switzerland, AHEXY provides human resource services to businesses and organizations. It operates approximately 4,300 branches in 59 countries and territories. The company also operates Hired, a talent recruitment platform.
AHEXY’s revenue increased 2% year-over-year to €5.50 billion ($5.72 billion) for its fiscal fourth quarter, ended Dec. 31, 2021. However, its operating income decreased 15% year-over-year to €191 million ($199 million). In addition, its total liabilities came in at €8.07 billion ($8.40 billion) for the period ended Dec. 31, 2021, compared to €6.57 billion ($6.85 billion) for the period ended Dec. 31, 2020.
The stock has declined 20.9% in price over the past month to close yesterday’s trading session at $16.50.
AHEXY’s POWR Ratings are consistent with this bleak outlook. In addition, the stock has an F grade for Sentiment and a D grade for Quality.
Click here to see AHEXY’s Momentum, Value, Growth, and Stability ratings. In addition, AHEXY is ranked # 16 in the Outsourcing - Staffing Services industry.
UPWK shares were trading at $16.69 per share on Tuesday afternoon, up $0.19 (+1.15%). Year-to-date, UPWK has declined -51.14%, versus a -14.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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