eyeQ: four reasons why this stock just got interesting
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. Here, it studies a UK economic bellwether.
15th January 2025 11:04
by Huw Roberts from eyeQ
"Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance." eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
PageGroup
Macro Relevance: 80%
Model Value: 363.12p
Fair Value Gap: -19.68% discount to model value
Data correct as at 15 January 2025. Please click glossary for explanation of terms. Long-term strategic model.
Hays (LSE:HAS)’ provided a trading update today and it echoed the downbeat sentiment from fellow recruiters PageGroup (LSE:PAGE) and Robert Walters (LSE:RWA) last week. In short, all three see the UK labour market as “subdued”.
Fair enough, the mood music since the Budget has not been great. A recent survey by the British Retail Consortium shows that more than half of retailers plan to cut staff hours, while 46% said they’d reduce store headcount.
As investors, though, we’re always on the lookout for when a story is already priced in and opportunities may present themselves.
On eyeQ, PageGroup looks interesting.
1) It is in a strong macro regime. Our macro factors such as growth, inflation and the Bank of England explain 80% of price action. Moreover, that number has been consistently high for some time.
2) It’s tentative but model value may be showing signs of stabilising. Macro conditions deteriorated over the second half of 2024 but, early in 2025, model value is potentially trying to find a bottom.
3) However, the stock itself has fallen by more than 10% in January. The downbeat guidance they gave last week has prompted some analysts to turn negative; Barclays, for example, downgraded its price target.
4) The contrast between 2 and 3 means Page sits nearly 20% cheap to the broad macro environment, according to eyeQ.
There are a lot of doom-and-gloom headlines around the UK at the moment, and a lot of that is justified. But that doesn’t mean there aren’t opportunities out there.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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