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Why On Assignment Shares Surged

By Brian D. Pacampara, CFA - Apr 25, 2013 at 3:11PM

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Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of professional staffing firm On Assignment (ASGN 3.46%) popped 11% today after its quarterly results and guidance topped Wall Street expectations.

So what: On Assignment's first-quarter results -- adjusted EPS of $0.35 on a revenue spike of 148% -- and current-quarter guidance were so strong, that analysts have no choice but to raise their valuation estimates, yet again. In fact, adjusted EBITDA expanded 50 basis points, to 8.8% from the year-ago period, fueling investor optimism over management's ability to sustain profitable growth.

Now what: Management now sees second-quarter EPS of $0.27-$0.29 on revenue of $410 million-$414 million, nicely ahead of Wall Street's view of $0.26 and $402 million. "We believe we are well positioned to meet or exceed our financial targets for the full year," President and CEO Peter Dameris said in a statement. "Demand for our services is strong and in most of our segments our growth is outpacing the market." With the stock hitting a new 52-week high today, and trading at a 25-plus P/E, however, much of that growth might already be baked into the valuation.

Interested in more info On Assignment? Add it to your watchlist.

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On Assignment, Inc. Stock Quote
On Assignment, Inc.
ASGN
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