In the tight labor market created by a swollen economy, the success of professional staffing company On Assignment Inc. has been a matter of following the fundamentals.
On Assignment, which handles temporary and permanent placement of scientific, health care and other highly trained personnel, has enjoyed quite a lift in its stock price over the past year.
“A lot of (the reason for On Assignment’s success) is just plain blocking and tackling,” said Philip Mulqueen, an analyst with C.L. King & Associates in New York.
Since hitting a 52-week low of $13.50 per share on Nov. 30, 1999, On Assignment’s stock price has risen steadily. On June 28, it topped out at $34.94 before falling back to around $27 as of last week.
Analysts said the retrenchment since summer is largely connected to the overall selloff on Nasdaq, rather than to any inherent weakness in the company. In fact, some of the early-2000 rise in On Assignment’s stock price was due to investors’ shift back to profitable companies after the spring “tech wreck” and related dot-com fallout, said Adam Waldo of Credit Suisse First Boston Corp.
On Assignment officials were not available for comment about the company and its performance.
For the third quarter ended Sept. 30, the company reported net income of $5.1 million (22 cents per share), compared with net income of $3.8 million (17 cents a share) for the like period a year earlier. Revenue was $51.1 million vs. $42.2 million.
The company has managed to post steady growth by expanding internally and seizing smart opportunities for geographic expansion, rather than by bulking up by buying lots of smaller companies, said Waldo.
“The bottom line is, they didn’t do anything revolutionary with regard to operations,” he said. “That’s why the market loved them in 2000.”
In recent years, much of On Assignment’s growth has come internationally and ahead of schedule. While announcing its third-quarter earnings, the company also detailed the opening of 11 new branches in the quarter, bringing On Assignment’s worldwide total of branch offices to 172.
The firm’s lab support unit entered its fifth nation when it opened a branch in Antwerp, Belgium. It also launched an operation in Rotterdam, its second in Holland.
In addition, divisions specializing in supplying employers with domestic lab support, health care financial staffing and clinical lab staff opened new branches.
Those moves reflect a recovery of sorts in the strategy of On Assignment.
Judith Scott, an analyst with Robert W. Baird & Co., said that On Assignment and the professional staffing industry in general struggled in the market last year because of the after-effects of the Y2K issue.
In 1997 and 1998, tech companies, desperate to develop new software and equipment to protect computer systems, were rapidly hiring armies of temporary workers to get the job done. On Assignment, however, did not dive into the staffing of information technology jobs, even though other firms in the placement industry found positions for mobs of tech people who worked on Y2K compliance issues.
“That (over-concentration on IT) came back to bite the industry as it settled out,” Scott said.
When that IT demand dropped sharply after the turn of the millennium, some companies were left floundering. On Assignment, however, was in a better position to make the transition to the post-Y2K world.
On Assignment’s concentration is on placing highly trained personnel in the science and health care fields, and most of its placement professionals have themselves worked in lab settings.
Mulqueen believes that On Assignment will see continued steady growth into the new year. He said the plans call for further expansion into Canada and Europe, with an emphasis on Switzerland. Meanwhile, the health financial services division is targeted for further growth in the United States.
