SOURCE: Staffing 360 Solutions, Inc.

March 30, 2016 09:30 ET

Greenridge Global Issues Buy Rating and $6 Price Target on Staffing 360 Solutions, Inc.

NEW YORK, NY--(Marketwired - March 30, 2016) - Greenridge Global Equity Research has initiated coverage on Staffing 360 Solutions, Inc. (NASDAQ: STAF), an international staffing services provider embarking on a rollup acquisition model with a near-term goal of reaching $300 million in annual revenue, with its newly released research report that includes a Buy Rating and a $6.00 price target.

Greenridge Global's Report can be viewed at: http://tinyurl.com/h7lajjg

Staffing 360 Solutions focuses on staffing companies located in the United States and abroad in the United Kingdom that service one or more of its five pillars: Accounting & Finance, IT, Engineering, Administration and Light Industrial. Staffing 360 Solutions looks for acquisition candidates that are located in the same geographic region, have a strong owner/operator, and are larger, in size, in terms of revenue (targeting at least $20 million in annual revenue).

In Greenridge Global's report, analyst, William Gregozeski, CFA, highlighted a number of key points to consider when reviewing Staffing 360 Solutions:

  • Staffing 360 Solutions is embarking on a roll-up strategy, having acquired seven white-collar staffing firms with a mix of cash, stock and notes/earn-outs in the last three years. Management believes it can continue building the business through organic and acquired growth, potentially becoming an attractive acquisition target by a major along the way.
  • Pending the availability of cash from a financing, management has several staffing companies in its acquisition pipeline that, if all were to close, would bring STAF over its initial target of $300 million in annual revenue.
  • Staffing 360 Solutions has an experienced management team that employs its Intelligent Integration approach to its acquisitions, which in conjunction with selecting higher margin targets in fast growing staffing segments, has yielded organic revenue growth above industry averages.
  • Staffing 360 Solutions trades at more than a two-thirds discount to comparable smaller publicly listed staffing companies and multiples paid for privately held staffing companies. We expect the Company will move more in line with its peer group in the coming quarters.
  • Trading in STAF is extremely illiquid, as it currently has roughly 350,000 shares in the float. The registration of all remaining shares and share equivalents, along with the sale of new shares should help build a more liquid market that is less subject to the big percentage swings it has seen in trading since the company's reverse split.
  • The increase in the fully diluted share count will likely be somewhat minimized when Staffing 360 Solutions completes a placement in the coming months on account of the roughly 90,000 warrants exercisable at $18.00 expiring in the next few months and the 500,000 warrants exercisable at $20.00 expiring in one year.

William Gregozeski said in his valuation of Staffing 360 Solutions, "We are initiating coverage of Staffing 360 Solutions with a Buy rating and $6.00 target price. Despite showing above average organic industry growth rates, the Company is valued at a significant discount to its peers, especially on an EV/Revenue basis. While it looks fairly priced on a trailing EV/aEBITDA metric, we note it is skewed given STAF's recent move to positive aEBITDA and expect the continued growth in aEBITDA will be reflected with a higher stock price. We believe the Company will continue to trade at discounts to its peers until it works through it cash obligations and increases its aEBITDA margin. Our target price is based on an EV/aEBITDA multiple of 7.0 times our forward twelve month aEBITDA estimate of $6.65 million."

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