IT services provider ASGN (NYSE: ASGN) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales fell by 1.4% year on year to $1.02 billion. The company expects next quarter’s revenue to be around $1.00 billion, close to analysts’ estimates. Its GAAP profit of $0.67 per share was 4.8% below analysts’ consensus estimates.

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"Revenues of $1.02 billion were above the high-end of our guidance range, while Adjusted EBITDA margin of 10.6% was at the top end of our expectations for the quarter,” said ASGN’s Chief Executive Officer, Ted Hanson.

Company Overview

Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE: ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years.

With $4.00 billion in revenue over the past 12 months, ASGN is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, ASGN grew its sales at a sluggish 2.9% compounded annual growth rate over the last five years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. ASGN’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 6.8% annually.

This quarter, ASGN’s revenue fell by 1.4% year on year to $1.02 billion but beat Wall Street’s estimates by 2.4%. Company management is currently guiding for a 2.8% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Operating Margin

ASGN was profitable over the last five years but held back by its large cost base. Its average operating margin of 8% was weak for a business services business.

Analyzing the trend in its profitability, ASGN’s operating margin decreased by 1.7 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. ASGN’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, ASGN generated an operating margin profit margin of 5.8%, down 1.9 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for ASGN, its EPS declined by 1.8% annually over the last five years while its revenue grew by 2.9%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into ASGN’s earnings to better understand the drivers of its performance. As we mentioned earlier, ASGN’s operating margin declined by 1.7 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For ASGN, its two-year annual EPS declines of 18.3% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q2, ASGN reported EPS at $0.67, down from $1.02 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects ASGN’s full-year EPS of $3.15 to grow 1.7%.

Key Takeaways from ASGN’s Q2 Results

It was encouraging to see ASGN beat analysts’ revenue and EBITDA expectations this quarter. On the other hand, its full-year EPS guidance missed and its EPS fell short of Wall Street’s estimates. Overall, this was a mixed quarter. The stock traded up 6% to $53 immediately following the results.

Big picture, is ASGN a buy here and now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.