Why Monster Worldwide Has 'Monstrous' Intrinsic Value

• Shares of Monster Worldwide, Inc. MWW have moved up almost 37 percent, year to date, reaching a high of $8.11 on August 17.
• Macquarie’s Kevin McVeigh has reiterated an Outperform rating and price target of $10 on the company.
• McVeigh expects the stock to benefit from the company having entered into an agreement to sell its remaining stake in JobKorea.

“We are encouraged by this deal, as it is consistent with Monster’s focus on online recruitment. In addition, the proceeds provide financial flexibility, as Monster focuses on enhancing shareholder returns as part of its capital allocation plan,” McVeigh stated.

The sale is expected to add 4¢ per share annually, which McVeigh believes could be well offset with a buyback program. The transaction is likely to close in October 2015.

This sale follows the sale of Monster Worldwide’s 49.99 percent stake in JobKorea to H&Q Korea in December 2013. “Monster will continue working with H&Q as part of its international cross-selling arrangement,” the Macquarie report said.

In addition, McVeigh believes, “Monster’s margins could flex later in the cycle driving higher earnings. The margin story could help offset a potentially lower multiple as we get later in the cycle.”

McVeigh also expressed optimism regarding the stock, based on expectations that employment trends for higher skill candidates would continue to improve. Also, the company has effectively redefined its business strategy and returned 10.5 percent to shareholders over the past three “quiet” periods.