Staffing 360 Solutions (STAF), a company specializing in acquiring and integrating staffing agencies across the US and the UK, has been a turbulent stock for years. Its history is marked by acquisitions, restructuring, and a constant struggle for profitability. Despite a brief period of positive earnings in 2022, recent quarters have shown a return to losses, leaving many investors wondering if this staffing consolidator can ever truly deliver on its promise.

But hidden within the company's recent financial data, a fascinating trend has emerged - a trend that, as far as I can tell, has been completely overlooked by Wall Street analysts. This overlooked signal suggests that Staffing 360 Solutions may be on the cusp of a significant turnaround, with the potential for substantial stock appreciation.

The key lies in the relationship between Staffing 360 Solutions' cash flow from financing activities and its common stock shares outstanding. A close examination of these figures over the past three years reveals a curious pattern:

Notice the dramatic decrease in cash flow from financing activities in 2021, coinciding with a tenfold decrease in outstanding shares. This suggests a substantial share buyback program was implemented. Then, in 2022, financing cash flow turns negative while outstanding shares rise, implying the company began issuing new shares.

This sequence of events paints a compelling picture. Staffing 360 Solutions, seeing an undervalued stock, likely used the financing cash flow from 2020 to buy back a huge chunk of its own shares, drastically reducing the number outstanding. This would have two key effects:

Increased Earnings Per Share (EPS): With fewer shares in circulation, the same amount of earnings is divided among a smaller number of shares, thus boosting EPS. This makes the company appear more profitable to investors.

Signal of Confidence: The buyback itself acts as a powerful signal to the market. It demonstrates the company's belief in its own future prospects and its assessment that the stock is undervalued.

The subsequent issuance of new shares in 2022, while resulting in a negative cash flow from financing activities, could also be a strategic maneuver. If the company believed the stock price had risen sufficiently after the buyback, issuing new shares would allow them to raise capital for further acquisitions and growth initiatives, taking advantage of a higher stock price.

This hypothesis is further supported by the company's recent acquisition activity. While no specific details are provided in the data, Staffing 360 Solutions' entire business model revolves around acquiring and integrating staffing agencies. It's highly probable that the capital raised through new share issuance in 2022 was directed towards this core strategy.

What does this mean for investors?

If this hypothesis is correct, it suggests that Staffing 360 Solutions management is playing a shrewd game. They recognize the undervaluation of their stock and are using financing activities to manipulate the share structure, enhancing EPS and potentially setting the stage for future growth fueled by acquisitions.

This hidden signal could be a potent indicator for savvy investors. While the stock currently trades at a low price, the underlying strategy suggests a potential for significant appreciation if the company successfully integrates its new acquisitions and returns to profitability.

Of course, any investment carries risks, and Staffing 360 Solutions is no exception. The company's history is checkered, and its success hinges on the complex process of acquiring and integrating disparate staffing agencies. But for those willing to look beyond the surface and uncover the hidden signals in the financial data, STAF may present a unique and potentially lucrative opportunity.

"Fun Fact: The global staffing market is expected to reach $765 Billion by 2028. Could STAF be a major player in this massive industry?"