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Staffing firm Robert Half International Inc (RHI - Analyst Report) is set to report its first-quarter 2013 results on Apr 23 after the market closes. Last quarter, it posted a 2.4% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Strong revenue growth boosted by continued demand for specialized staffing and consulting services, particularly in the U.S. proved to be Robert Half’s strength in the fourth quarter. Further, the improving global economic condition has heightened the demand for the company's temporary and permanent staffing services and risk consulting and internal audit services.

Robert Half witnessed strong revenue growth in each of its business segments. Earnings of 42 cents increased 40% from the year-earlier quarter, marking the 11th straight quarter of more than 20% increase. Gross margin expanded 50 basis points to 40.3% in the quarter while operating margin increased 200 basis points to 9.4% on the back of higher gross margins, lower operating expenses and solid perfrmance of the company’s wholly-owned subsidiary, Protiviti. However, currency headwinds and a tough job scenario, particularly in Europe, resulted in soft demand for recruitment services.

Earnings Whispers

Our proven model does not conclusively show that Robert Half is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 for this to happen. That is not the case here as shown below.

Zacks ESP: The Earnings ESP is 0.00%.

Zacks Rank #3 (Hold): Robert Half’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with an ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies in the business services sector you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

AMN Healthcare Services (AHS - Snapshot Report) with Earnings ESP of +8.33% and a Zacks Rank #2 (Buy)

Paychex, Inc. (PAYX - Snapshot Report) with Earnings ESP of +2.70% and a Zacks Rank #2 (Buy)

Stericycle, Inc. (SRCL - Analyst Report) with Earnings ESP of +1.14% and a Zacks Rank #3 (Hold)

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