Stock of the week: IWG
IWG is our Share of the Week as it is benefitting from the structural shift in the modern corporate world for flexible and mobile work solutions. In response to this, the group remains focused on expanding its global and national networks, looking for presence in new countries and cities.
The firm is the world’s largest provider of flexible office space with a global network of roughly 3,000 premises spread over 1,000 towns and cities and 100 countries. IWG provides the ideal service for small or start-up businesses, and multinationals looking to expand into new regions. Its services result in considerable cost savings with receptionists and other IT servicing costs spread out among many firms.
The Q1 trading update in May showed revenues increase by 9.1% compared to the same period last year to £581m, largely driven by currency movements. Interested investors should appreciate that operating performance figures saw a big improvement on the relatively weak Q4 numbers.
Also worth noting was the good level of sales activity. In particular, the UK and Asian markets caught up with the US and European markets with a good start to the year. Furthermore, the company also added a further 51 new locations to its global portfolio.
We therefore recommend this stock as ‘buy’ for investors seeking capital growth and those willing to accept a medium to higher level of risk. As the company matures, management are seeking to de-risk the business to improve financial returns and will consider more partnerships. Investors should also note that management expect to see more economies of scale coming through following the recent group restructuring.