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Investment Overview for Monster (NYSE:MWW)
Below are key drivers of Monster's value that present opportunities for upside or downside to the current Trefis price estimate for Monster:
Career Services North America
- Career Services North America Revenue: This figure has declined over the past few years and stood at $446 million in 2013. We expect Monster's business to revive and forecast this figure to reach $490 million by the end of our forecast period. However, if Monster can plug the major gaps in its business model and create a service that can effectively compete with LinkedIn, its revenues in North America can increase substantially. If the figure jumps to $610 million by the end of our forecast period, there can be 15% to our price estimate for Monster.
Career Services International
- Career Services International Revenue: Monster has struggled internationally, and has exited some unprofitable markets. Due to significant restructuring, it now hopes to focus on key markets and grow its business. We expect the company's international career services revenues to increase from $289 million in 2013 to $325 million by the end of our forecast period. However, there can be close to 10% upside to our price estimate if this figure jumps to $490 instead.
Monster operates Monster.com, an online job search portal that connects employers with job seekers. Monster has local presence in all the primary job markets of North America and Internationally (primarily Europe and Asia). In each geography, the company makes money from two sources:
- Employers - Employers range from large enterprises to Small and Medium Businesses (SMBs). Employers pay Monster to list available job openings on the Monster.com website and also to get the rights to view resumes of candidates / job seekers. Revenue from employers is the main source of revenue from in each geography.
- Job Seekers - While Monster does not charge job seekers to search through job openings or listings, it does charge job seekers for premium services such as resume writing, covering letter writing and priority resume listing.
Monster's North America Career Services business is the primary source of value. The company earns majority of its revenues and profits from this segment, which can be attributed to its higher domestic market share as compared to international markets, and slightly better job trends. The economy in Europe has suffered in recent years whereas the U.S. has seen a gradual revival. Additionally, Monster had to exits several unprofitable international markets which further emphasize the importance and value of its North American business. The revenue contribution of career services North America has increased consistently from 48% in 2010 to 55% in 2013.
Improving resume search technology
Monster has improved its resume search over the last few years by incorporating intelligent search technology, Semantic 6Sense, into its new generation of products for both employers and job seekers. Traditional keyword search for resumes is inefficient due to the high number of candidates that may have broadly relevant experiences. Such search results in a long list of candidates to choose from for recruiters, making it more time-consuming to find the right candidate. Monster's 6Sense semantic resume search has been useful for many big recruiters. The company mentioned that 97% of recruiters in the U.S. who conducted a benchmarking study reported that they found relevant candidates faster using Monster's 6Sense search.
LinkedIn's growing popularity suggests that Monster's business model is becoming obsolete
Monster is facing tough competition from LinkedIn in particular. Many LinkedIn members are employed and are known as “passive candidates”, the kind of candidates recruiters covet since conventional wisdom is that the best people already have jobs. Monster does not have a similar network, as Monster.com attracts candidates when they are either unemployed or are considering changing their job. In essence, the company’s business model is getting outdated and the recruitment industry is rapidly expanding beyond traditional job boards. Monster will need to come up with technology that can better match recruiters and headhunters with their target professionals.
How Does Trefis Modelling Work?
How do we get the historical numbers for this chart?
Trefis has a team of in-house Analysts who gather historical data from company filings and other verifiable sources. When historicals are available, we explain how we got them at the bottom of the Trefis analysis section below.
Who came up with the Trefis forecast for future years?
The Trefis team of in-house Analysts considers a variety of factors when projecting any forecast. The rationale for our projections is explained in the Trefis analysis section below.
How does my dragging the trendline on the chart impact the stock price?
- We use forecasts for business drivers to calculate forecasted Revenues and Profits for each division of the company.
- We then use forecasted Profits in a Discounted Cash Flow (DCF) model to obtain the Price Estimate for the company.
See more on: DCF Methodology
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