Robert Half Looks to Get Whole

Robert Half International Inc. (RHI - Analyst Report) headquartered in California, is one of the world’s largest providers of temporary staffing, project professionals, and permanent placement services to the finance and accounting industries. Although the company benefited from double-digit revenue growth in 2007, the global financial crisis and resultant economic slowdown is negatively impacting staffing companies.

Robert Half’s operating margin is contracting, primarily due to weak operations at Protiviti, which embarked on an aggressive global staff expansion program at the same time revenues came under pressure from reduced client demand for compliance-related employees. The Hold rating is maintained.

Robert Half International is currently trading at 10.1 times trailing 12-month earnings. The company is quite cyclical, and therefore the stock should be valued on a price-to-sales (net service revenues) basis. Over the last five years, the stock traded in a P/S range of 1.05 to 2.62, dropping to 0.57 times net service revenues in the last few months. The cyclical peak for the company’s U.S. businesses remains the primary concern. Robert Half currently trades at 0.60 times trailing 12 month net service revenues. The target of $20.25 is based on a 0.65 P/S ratio on 12 month trailing net service revenues.

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