Monster Worldwide Inc. (NYSE:MWW) is a web-based recruitment firm, which operates under the Monster.com website connecting job opportunities and people. Operating in more than 40 countries, Monster currently provides the largest and most sophisticated job seeking, career management, recruitment and talent management capabilities globally, with over 200 million people registered. Through both its website and mobile apps, Monster connects quality job seekers with prospective employers, allowing its users to improve their search and receiving personalized career advice.
This company operates under three segments, namely Careers – North America, Careers – International, and Internet Advertising & Fees. The Monster’s Career segment provides services such as job posting, resume database access, and recruitment media solutions, for both employers and human resource companies, charging a fee. Through the Internet Advertising & Fees segment, the company allows online marketers to deliver targeted online advertising messages, generating revenue from displayed advertising.
- Warning! GuruFocus has detected 2 Warning Signs with MWW. Click here to check it out.
- MWW 15-Year Financial Data
- The intrinsic value of MWW
- Peter Lynch Chart of MWW
The Context and Its Discontents
The macroeconomic environment has been for some time, as we know, less active than it used to be. For a company such as Monster, working with recruitment agencies and job offers, the reluctant hiring context in the U.S. has indeed affected its results. Nevertheless, business condition in North America and Europe is improving, and the company is likely to regain earning levels. In addition to the invigorated economic context, the company’s management is planning a corporative restructure, expected to boost margins, as well as an expansion towards the Asia-Pacific region. Recent acquisitions of TalentBin and Gozaik are expected to position Monster in the social networking market with greater visibility.
Some of the new technologies developed by Monster gather in their new product portfolio, with products like 6Sense, Monster Power Resume Search (PRS), cloud-based search product, Monster Government Solutions (MGS) and Career Ad Network (CAN). This investment in new products is designed as to enlarge customer base and increase global revenues. The expansion of these last two products (CAN and MGS) is expected to amplify traffic and lift both top-line growth and profitability.
Expansions and Improvements
As a part of the management’s plans to enhance the company’s figures, it started to develop new alliances with media and publishing companies in order to expand the company’s presence among local and regional job seekers in the US. Teaming up with Finnish Alma Media Corp., Monster expects a higher penetration in Eastern Europe and Baltics region and thus an expanded customer base.
Moreover, the company plans on restructuring its core business, improving cost structure and increasing profitability. Reducing non-sales headcount and operating expenses, it will be able to reinvest savings in marketing, gaining more visibility, and help the company reduce its losses in the long run. The acquisition of companies such as TalentBin, Gozaik, JobBusan, HotJobs and Trovix are a key factor in Monster’s growth story, contributing to expansion in North America, Europe and Asia-Pacific. These acquisitions have represented an enhancement on the company’s technology and platform, allowing a higher customer targeting for new product release. This accretive acquisition history of the company is likely to continue and has come to represent an important part of Monster’s boosting technological strategy.
Despite being a company that has managed to sustain revenue growth among the sluggish macroeconomic environment, both Europe and North America are likely to continue posing setbacks in terms of employment levels. Hiring budgets are still tight and the company’s expansion plans are subjected to these major hindrances. Korea and India, despite being countries offering tremendous expansion opportunities for companies such as Monster, in terms of massive emerging markets, their business conditions are still unstable.
In terms of competition, it has been intensifying over the last few years, and Monster is losing some market share to other emerging companies in the online employment market, as well as to alternative social media sites such as Facebook or LinkedIn. Revenues were hurt and declined faster than operating expenses over the last years. Operating margins declined from 9.9% in 2011 to 6.6% in 2013. Last fourth-quarter reported EPS of $0.02, declining year over year by 59.9%. Nevertheless, analysts have set a price target of $8.25, higher than the price the stock has been showing the last couple of weeks, around $7.57.
Disclosure: Damian Illia holds no position in any stocks mentioned.