A Look at Employment Growth and Monster Stock

Last week the U.S. non-farm payroll report for May 2011 indicated that the unemployment rate was essentially unchanged at 9.1% with only 54,000 jobs added. ^[1] This was the slowest jobs growth in the last eight months and it renewed fears of a U.S. economy slowdown. ^[2] Monster (NYSE:MWW) depends heavily on the employment data and this news has caused its stock to decline by 14% over the past week. Monster is already feeling the competitive pressures from niche players like careerbuilder.com and jobcentral.com, and from social networks like LinkedIn (NYSE:LNKD), Facebook and Craiglist.

Our $14 price estimate for Monster stock is roughly 5% above market price.

New Job Additions is a Key Metric for Monster

Monster derives about 37% of its stock value from North America. The number of new job postings on Monster has declined steadily from 1.9 million in 2007 to 1.1 million in 2010 due to the recessionary environment that prevailed for a large part of the last 4 years. We expect slow employment growth and increasing competitive pressures to cause new job additions in North America to stagnate for Monster in the long-term.

The May 2011 employment report has renewed fears of an economic slowdown, which could exacerbate the employment situation in the U.S. and the rest of the world. If this slowdown continues, then the number of new job postings on Monster could face additional pressure.

See our complete analysis for Monster stock here

1. Employment Situation Summary, U.S. Bureau of Labor statistics: May 2011 report, June 3rd 2011 [↩]
2. Weak jobs growth drags down staffing stocks: Reuters, June 3rd 2011 [↩]