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Why 51job, Inc. Stock Plunged Today

By Steve Symington – Aug 3, 2018 at 3:39PM

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Light guidance overshadowed solid quarterly results from the Chinese online recruiter.

What happened

Shares of 51job Inc. (JOBS) were down 20.2% as of 3:20 p.m. EDT Friday after the Chinese online recruiting leader announced mixed second-quarter 2018 results and disappointing forward guidance.

On the former, 51job's revenue climbed 33% year over year, to $135.3 million, and translated to an adjusted net income of $54.2 million, or $0.82 per share. Both figures exceeded the company's own guidance, and consensus estimates predicted lower earnings of $0.65 per share on higher revenue of $138.8 million.

Image of Shanghai skyscrapers from below


So what

51job's growth was broad-based, as well, with online recruitment-services revenue climbing 32.5%, to $88.9 million, and other HR-related revenue rising 34%, to $46.4 million. 

"With clear focus and purpose, we continued to solidly execute our high-quality growth strategy," stated 51job CEO Rick Yan. "Our online business maintained an uptrend in revenue per employer as we successfully drove greater spending by existing, more sophisticated customers and worked through increased prices on certain entry-level online packages among new, smaller sized customers."

Now what

Looking ahead to the third quarter of 2018, however, 51job expects revenue ranging from $136.8 million to $141.3 million, which should translate to adjusted earnings per share of $0.56 to $0.60. Most analysts, however, were looking for higher third-quarter earnings of $0.69 per share on revenue of $150.1 million. 

Of course, 51job has made a habit of under promising and over delivering of late, so this outlook could certainly be conservative. But with shares up nearly 85% in the year leading up to this report, it's hardly surprising to see the stock pulling back today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends 51job. The Motley Fool has a disclosure policy.

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