ASGN – Although management has concerns about revenue, contract awards, and margins, market expectations are far too bearish, suggesting longer-term upside remains warranted

• ASGN Incorporated (ASGN:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 13.2x Uniform P/E, implying bearish expectations for the firm. Additionally, although negative management sentiment suggests the potential for near-term headwinds, the firm’s historical performance and leadership in its space suggest longer-term upside remains warranted
• Specifically, management may be concerned about their ability to sustain recent revenue growth rates and EBITDA margins. Furthermore, they appear concerned about declining permanent placement revenue mix, and they may be concerned about the sustainability of DHA’s EBITDA margin expansion. Moreover, management may be concerned about the sustainability of recent contract award rates and about their ability to sustain DHA’s recent revenue growth rates. Finally, management may lack confidence in their ability to repurchase shares through the remainder of the year
• Although management’s concerns about revenue, contract awards, and margins suggest the potential for near-term headwinds, market expectations for Uniform ROA to decline to levels not seen since the Great Recession appear too bearish, especially given the firm’s historical performance and leadership in its space. As such, multiple expansion and equity upside remain warranted in the long-term.