Robert Half Upgraded to Outperform
by Zacks Equity ResearchMay 18, 2012 | Comments : 0 Recommended this article: (0)
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Robert Half is one of the world’s largest providers of temporary staffing, project professionals, and permanent placement services to the finance and accounting industries.
The company delivered first quarter 2012 earnings of 34 cents per share which outperformed the prior-year earnings by 16 cents and the Zacks Consensus Estimate by 28 cents per share driven by solid top line growth. During the quarter, Robert Half's total revenue increased 15.3% to $1.02 billion compared with $880.9 million in the year-ago period driven by strong revenue growth in each of the business segments. The results also exceeded the Zacks Consensus Revenue Estimate of $990 million.
(Read our full report at: Robert Half Beats on Topline)
We are optimistic on the stock owing to the improving global economic conditions and better job markets in U.S. which has heightened demand for the company’s temporary and permanent staffing services and risk consulting and internal audit services. The strong demand for these services has led to growth in revenues, margins and earnings.
Robert Half has been generating accelerating year-over-year revenue growth since the past two years, primarily driven by broad-based, improving demand for the company’s staffing services; both in North America and abroad. Revenue increased 4.5% to $3.18 billion in 2010, while it soared 19% to $3.78 billion in 2011. Foreign operations contributed 30% of total revenues generated in 2011 as compared to 29% of total revenues generated in 2010.
We are encouraged by management’s efforts to reward its shareholders through dividends and buybacks. Robert Half has regularly repurchased shares and paid dividends since 2008. During the years ended December 31, 2011, 2010, 2009 and 2008, Robert Half repurchased approximately 5.3 million, 3.7 million shares, 4.7 million shares and 9.4 million shares for a total cost of $142 million, $96 million, $110 million and $203 million, respectively. Similarly, the company has declared annual cash dividends of 56 cents, 52 cents, 48 cents and 44 cents per share during the years ended December 31, 2011, 2010, 2009 and 2008, respectively.
Though we remain concerned about the health care reforms related to staffing services, the company’s currency exchange rate fluctuations and weak economic conditions in Europe, the gradual recovery in the demand for the company’s services, in particular its staffing services, due to better economic condition in U.S., compel us to upgrade the recommendation to Outperform.
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