IT services provider ASGN (NYSE: ASGN) beat Wall Street’s revenue expectations in Q3 CY2025, but sales fell by 1.9% year on year to $1.01 billion. On the other hand, next quarter’s revenue guidance of $970 million was less impressive, coming in 0.6% below analysts’ estimates. Its non-GAAP profit of $1.31 per share was 7.1% above analysts’ consensus estimates.

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"ASGN delivered a solid performance in the third quarter, with revenues and Adj. EBITDA margin at the high end of our guidance. ASGN remains dedicated to providing industry-specific solutions that enable our clients to advance," said CEO, 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

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.

With $3.99 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’s 2.6% annualized revenue growth over the last five years was sluggish. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. ASGN’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 6.2% annually.

This quarter, ASGN’s revenue fell by 1.9% year on year to $1.01 billion but beat Wall Street’s estimates by 0.7%. Company management is currently guiding for a 1.5% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection implies its newer products and services will fuel 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 2.3 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 6.7%, in line with the same quarter last year. This 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.

ASGN’s flat EPS over the last five years was below its 2.6% annualized revenue growth. 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.

Diving into the nuances of ASGN’s earnings can give us a better understanding of its performance. As we mentioned earlier, ASGN’s operating margin was flat this quarter but declined by 2.3 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 shorter period to see if we are missing a change in the business.

For ASGN, its two-year annual EPS declines of 12.8% show its recent history was to blame for its underperformance over the last five years. These results were bad no matter how you slice the data.

In Q3, ASGN reported adjusted EPS of $1.31, down from $1.43 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 7.1%. Over the next 12 months, Wall Street expects ASGN’s full-year EPS of $4.68 to grow 2.7%.

Key Takeaways from ASGN’s Q3 Results

It was good to see ASGN beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter slightly missed. Zooming out, we think this was a mixed quarter. The stock remained flat at $48.33 immediately after reporting.

Big picture, is ASGN a buy here and now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.