We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Stocks to Invest in From the Promising Staffing Space
Read MoreHide Full Article
A gradually recovering economy, backed by upbeat manufacturing and service activities, led to an additional hiring and wage increase. These factors coupled with higher technology adoption and success of the work-from-home trend are benefiting the Zacks Staffing industry.
Robert Half International Inc.(RHI - Free Report) , Korn Ferry (KFY - Free Report) and Kforce, Inc. (KFRC - Free Report) are some stocks that are likely to gain from the above-mentioned industry trends. However, job loss concerns amid market uncertainties persist.
Industry Description
The Zacks Staffing industry comprises companies, which provides a wide range of services related to human resources, and workforce solutions and services. These include employment screening, recruitment (both for temporary staffing and long-term placements), retirement solutions, human capital management, payroll management, performance management, organizational planning, financial and expense management. Some industry participants also provide staffing and risk consulting services, professional staffing services and solutions in the United States and internationally, business solutions to improve the business performance of small and medium-sized businesses as well as organizational consulting services worldwide.
What's Shaping the Future of Staffing Industry?
Healthy Demand Environment:The industry has been witnessing growth in revenues and income over the past few years, which enabled most players to pay out stable dividends and repurchase shares. The industry also stands to benefit from the gradual resumption of business activities, which were postponed or restricted by the coronavirus-triggered strict lockdowns across the globe. This led to additional hiring and wage increase.
Economic Recovery: The staffing industry stands to benefit from the gradual resumption of business activities, which were postponed or restricted due to the coronavirus-induced strict lockdowns across the globe.
The industry is a major beneficiary of manufacturing and service activities, which in turn, are dependent on economic health. The Institute for Supply Management measured that both Manufacturing PMI and Services PMI clocked the 21st consecutive month of expansion in February. A steady economic recovery is evident from the fourth-quarter 2021 GDP number, which according to the "second" estimate released by the Bureau of Economic Analysis, increased at an annual rate of 7%, higher than 2.3% growth witnessed in third-quarter 2021.
This steadily improving U.S. economy, backed by an uptick in manufacturing and service activities, led to additional hiring and wage increase. The U.S. economy added 678,000 jobs in February, higher than 481,000 included in January and 588,000 in December. The unemployment rate also came down to 3.8% in the same month from 4% in January and 3.9% in December. Average hourly earnings in February increased 1 cent to $31.58, registering a 5.1% increase from the year-ago period’s reported figure. Average weekly earnings grew 0.3% to $1,095.83, registering a 5.4% increase from the prior-year period’s reported number.
Increased Adoption of Technologies: Technology-based recruiting techniques like social media, mobile technology, artificial intelligence and Big Data became popular. Video-conferencing tools, such as Google Meet, Zoom, Skype and Microsoft Teams are being used to communicate with clients, conduct interviews and meetings, manage staff virtually plus handle remote training and remote surveillance. Also, technologies like cloud and blockchain offer more storage and safety to HR data. These trends should keep demand for staffing services in good shape.
COVID-induced remote working model led to cost savings for many firms by bringing down their spending on real estate and reducing business travel. Staffing companies are also finding new opportunities with the digitization of the workforce and demand for software-as-a-service solutions to meet new challenges in the current scenario.
Zacks Industry Rank Indicates Encouraging Prospects
The Zacks Staffing industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #3. This rank places it in the top 15% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The buy-side analysts covering the companies in this industry have been increasing their estimates for a while. Over the past year, the industry’s consensus earnings estimate for the current year has increased 37.5%.
Before we present a few stocks that investors can buy given their sturdy potential, let’s take a look at the industry’s recent stock market performance and current valuation.
Industry Outperforms Sector and S&P 500
The Zacks Staffing industry has outperformed the broader Zacks Business Services sector as well as the Zacks S&P 500 composite over the past year.
The industry has gained 23.2% over this period against a 46.1% decline of the broader sector. The Zacks S&P 500 composite has risen 13.5% in the said time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing staffing stocks because of their high debt levels, the industry is currently trading at 8.39X compared with the S&P 500’s 14.73X and the sector’s 19.89X.
Over the past five years, the industry has traded as high as 13.06X, as low as 3.62X and at the median of 7.98X, as the charts below show.
EV-to-EBITDA
3 Staffing Stocks to Keep a Close Eye on
Robert Half: This Zacks Rank #1 (Strong Buy) California-based company provides staffing and risk consulting services in North America, South America, Europe, Asia and Australia. You can see the complete list of today’s Zacks #1 Rank stocks here.
Robert Half is witnessing demand for its staffing and business consulting services amid the economic crisis resulting from the COVID-19 pandemic. RHI’s wholly owned subsidiary Protiviti continues to benefit from its solid solutions offerings and a strong pipeline. RHI has been utilizing a major share of its capital expenditures on investments in software initiatives and technology infrastructure. This should aid its prospects amid the coronavirus-induced dependency on technology. RHI’s solid balance sheet is a major positive. Consistency in rewarding its shareholders through share repurchases boosts investor confidence in the stock and positively impacts the earnings per share.
The Zacks Consensus Estimate for RHI’s 2022 EPS has improved 8.6% in the past 90 days. The Robert Half stock has gained 60.9% over the past year.
Price & Consensus: RHI
Korn Ferry: This Zacks Rank #2 (Buy) California-based company provides organizational consulting services worldwide.
Korn Ferry continues to benefit from its business model, which is highly diversified in terms of geography, segment and industry. Revenue growth, operational efficiencies and reduction in expenses have been aiding the bottom line for a while. KFY’s solid cash position allows it to pursue strategic acquisitions, invest in growth initiatives and return cash through regular quarterly dividend payments and share repurchases.
The Zacks Consensus Estimate for Korn Ferry’s 2022 EPS has moved up 5.5% in the past 90 days. KFY’s stock has gained 7.5% over the past year.
Price & Consensus: KFY
Kforce: This Zacks Rank #1 Florida-based player provides professional staffing services and solutions in the United States and internationally. Kforce’s technology staffing and solutions business helped it stay competitive amid these challenging times. Rising demand for technology solutions enabled Kforce to increase investments in the cloud-based, technology-enabled operating model. This is expected to supplement KFRC’s growth amid coronavirus-induced reliance on technology. This apart, KFRC is anticipated to benefit from modifications in its business model and reduction of its operating costs.
The Zacks Consensus Estimate for Kforce’s 2022 EPS has moved up 9.9% in the past 90 days. The KFRC stock has gained 44.2% over the past year.
Price & Consensus: KFRC
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Stocks to Invest in From the Promising Staffing Space
A gradually recovering economy, backed by upbeat manufacturing and service activities, led to an additional hiring and wage increase. These factors coupled with higher technology adoption and success of the work-from-home trend are benefiting the Zacks Staffing industry.
Robert Half International Inc.(RHI - Free Report) , Korn Ferry (KFY - Free Report) and Kforce, Inc. (KFRC - Free Report) are some stocks that are likely to gain from the above-mentioned industry trends. However, job loss concerns amid market uncertainties persist.
Industry Description
The Zacks Staffing industry comprises companies, which provides a wide range of services related to human resources, and workforce solutions and services. These include employment screening, recruitment (both for temporary staffing and long-term placements), retirement solutions, human capital management, payroll management, performance management, organizational planning, financial and expense management. Some industry participants also provide staffing and risk consulting services, professional staffing services and solutions in the United States and internationally, business solutions to improve the business performance of small and medium-sized businesses as well as organizational consulting services worldwide.
What's Shaping the Future of Staffing Industry?
Healthy Demand Environment:The industry has been witnessing growth in revenues and income over the past few years, which enabled most players to pay out stable dividends and repurchase shares. The industry also stands to benefit from the gradual resumption of business activities, which were postponed or restricted by the coronavirus-triggered strict lockdowns across the globe. This led to additional hiring and wage increase.
Economic Recovery: The staffing industry stands to benefit from the gradual resumption of business activities, which were postponed or restricted due to the coronavirus-induced strict lockdowns across the globe.
The industry is a major beneficiary of manufacturing and service activities, which in turn, are dependent on economic health. The Institute for Supply Management measured that both Manufacturing PMI and Services PMI clocked the 21st consecutive month of expansion in February. A steady economic recovery is evident from the fourth-quarter 2021 GDP number, which according to the "second" estimate released by the Bureau of Economic Analysis, increased at an annual rate of 7%, higher than 2.3% growth witnessed in third-quarter 2021.
This steadily improving U.S. economy, backed by an uptick in manufacturing and service activities, led to additional hiring and wage increase. The U.S. economy added 678,000 jobs in February, higher than 481,000 included in January and 588,000 in December. The unemployment rate also came down to 3.8% in the same month from 4% in January and 3.9% in December. Average hourly earnings in February increased 1 cent to $31.58, registering a 5.1% increase from the year-ago period’s reported figure. Average weekly earnings grew 0.3% to $1,095.83, registering a 5.4% increase from the prior-year period’s reported number.
Increased Adoption of Technologies: Technology-based recruiting techniques like social media, mobile technology, artificial intelligence and Big Data became popular. Video-conferencing tools, such as Google Meet, Zoom, Skype and Microsoft Teams are being used to communicate with clients, conduct interviews and meetings, manage staff virtually plus handle remote training and remote surveillance. Also, technologies like cloud and blockchain offer more storage and safety to HR data. These trends should keep demand for staffing services in good shape.
COVID-induced remote working model led to cost savings for many firms by bringing down their spending on real estate and reducing business travel. Staffing companies are also finding new opportunities with the digitization of the workforce and demand for software-as-a-service solutions to meet new challenges in the current scenario.
Zacks Industry Rank Indicates Encouraging Prospects
The Zacks Staffing industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #3. This rank places it in the top 15% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The buy-side analysts covering the companies in this industry have been increasing their estimates for a while. Over the past year, the industry’s consensus earnings estimate for the current year has increased 37.5%.
Before we present a few stocks that investors can buy given their sturdy potential, let’s take a look at the industry’s recent stock market performance and current valuation.
Industry Outperforms Sector and S&P 500
The Zacks Staffing industry has outperformed the broader Zacks Business Services sector as well as the Zacks S&P 500 composite over the past year.
The industry has gained 23.2% over this period against a 46.1% decline of the broader sector. The Zacks S&P 500 composite has risen 13.5% in the said time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing staffing stocks because of their high debt levels, the industry is currently trading at 8.39X compared with the S&P 500’s 14.73X and the sector’s 19.89X.
Over the past five years, the industry has traded as high as 13.06X, as low as 3.62X and at the median of 7.98X, as the charts below show.
EV-to-EBITDA
3 Staffing Stocks to Keep a Close Eye on
Robert Half: This Zacks Rank #1 (Strong Buy) California-based company provides staffing and risk consulting services in North America, South America, Europe, Asia and Australia. You can see the complete list of today’s Zacks #1 Rank stocks here.
Robert Half is witnessing demand for its staffing and business consulting services amid the economic crisis resulting from the COVID-19 pandemic. RHI’s wholly owned subsidiary Protiviti continues to benefit from its solid solutions offerings and a strong pipeline. RHI has been utilizing a major share of its capital expenditures on investments in software initiatives and technology infrastructure. This should aid its prospects amid the coronavirus-induced dependency on technology. RHI’s solid balance sheet is a major positive. Consistency in rewarding its shareholders through share repurchases boosts investor confidence in the stock and positively impacts the earnings per share.
The Zacks Consensus Estimate for RHI’s 2022 EPS has improved 8.6% in the past 90 days. The Robert Half stock has gained 60.9% over the past year.
Price & Consensus: RHI
Korn Ferry: This Zacks Rank #2 (Buy) California-based company provides organizational consulting services worldwide.
Korn Ferry continues to benefit from its business model, which is highly diversified in terms of geography, segment and industry. Revenue growth, operational efficiencies and reduction in expenses have been aiding the bottom line for a while. KFY’s solid cash position allows it to pursue strategic acquisitions, invest in growth initiatives and return cash through regular quarterly dividend payments and share repurchases.
The Zacks Consensus Estimate for Korn Ferry’s 2022 EPS has moved up 5.5% in the past 90 days. KFY’s stock has gained 7.5% over the past year.
Kforce: This Zacks Rank #1 Florida-based player provides professional staffing services and solutions in the United States and internationally. Kforce’s technology staffing and solutions business helped it stay competitive amid these challenging times. Rising demand for technology solutions enabled Kforce to increase investments in the cloud-based, technology-enabled operating model. This is expected to supplement KFRC’s growth amid coronavirus-induced reliance on technology. This apart, KFRC is anticipated to benefit from modifications in its business model and reduction of its operating costs.
The Zacks Consensus Estimate for Kforce’s 2022 EPS has moved up 9.9% in the past 90 days. The KFRC stock has gained 44.2% over the past year.
Price & Consensus: KFRC