Sunday tips round-up: Capita, Staffline...

24th Oct 2010 12:26

Shares in outsourcing group Capita have had a rocky ride this year - as the outsourcing bulls and bears battle for control. Much has been made about the statement by the Conservative Suffolk Council that it intends to outsource almost all of its services.Before the Spending Review announcements this week, things had been going well at Capita. At its interim update, Capita revealed that it had the strongest bid pipeline for many years - up 47%, compared with the same point last year, to £4.4bn.The shares are trading on a December 2010 earnings multiple of 17.2, falling to 16.2 in 2011, and the yield is 2.4%. This seems fair, so the shares are now a hold until there is more clarity on future margins and new contracts says the Telegraph.Much smaller than peers such as Adecco and Manpower, recruiter Staffline makes up for its size by handling all its management on-site, eliminating extra costs that come with branch networks. The shares are cheap compared with recruitment and outsourcing peers, trading on a 2011 forward price/earnings ratio of 7.5. The question for potential investors is whether the company can maintain its sales growth, says the FT.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.