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Here Are 3 Staffing Stocks to Consider Despite Industry Woes
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The Staffing Firms industry is anticipated to reach the pre-pandemic levels gradually, allowing companies to pay out regular dividends. The swift adoption of remote work and hybrid models, backed by top-notch technological advancements, will drive the demand for staffing agencies. Kelly Services (KELYA - Free Report) , Heidrick & Struggles International (HSII - Free Report) and DLH Holdings (DLHC - Free Report) are benefiting from technological developments that improve efficiency.
Industry Description
The Zacks Staffing industry is a diverse sector encompassing companies that offer a comprehensive range of human resources and workforce solutions. These services cover various aspects of personnel management, including employment screening, recruitment services for both temporary and long-term job placements, retirement planning, human capital management, payroll administration, performance evaluation, organizational planning and financial management. Some firms within this industry provide specialized services, such as staffing and risk consulting, professional staffing and global business solutions tailored to the needs of small to medium-sized enterprises. They also offer organizational consulting services with a worldwide reach, catering to a wide and varied client base, which includes domestic and international businesses across different sectors and industries.
What's Shaping the Future of the Business Services Industry?
Stable Demand:The industry is mature. The consistency in demand for services has been strong for a while despite challenges in the manufacturing sector. Revenues, income and cash flows are expected to recover to the pre-pandemic levels gradually, allowing most industry players to pay out stable dividends.
Increasing Adoption of Remote Work & Hybrid Models: A significant boost in remote work has been witnessed since the pandemic, and it has made staffing agencies focus on flexible staffing solutions, including hybrid and remote work models. These adaptations assist clients and job-seekers to enjoy a better work-life balance. Given the continued demand for remote work, staffing agencies are expected to prioritize and meet evolving workplace preferences efficiently.
Tech-Driven Staffing Solutions on the Rise: The staffing sector is implementing technological advancements to optimize operations, boost efficiency and deliver services at their highest quality. The rising adoption of AI-driven tools and platforms makes attracting, evaluating and onboarding IT talents more effective. The increasing acceptance of social media and Big Data is being witnessed as well. Video-conferencing platforms, such as Zoom and Microsoft Teams, help in remote communication, and cloud and blockchain technologies improve HR data security. Such technological advancements ensure that the demand for staffing services continues.
Zacks Industry Rank Indicates Sluggish Near-Term Prospects
The Zacks Staffing Firms industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #219. This rank places it in the bottom 10% of 243 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates a continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and current valuation.
Industry Lags Sector & S&P 500
The Zacks Staffing Firms industry has underperformed the S&P 500 and the broader sector over the past year.
The industry has declined 35.6% against the S&P 500 composite’s growth of 19% and the broader sector’s marginal rise in the same timeframe.
1-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 5.77X compared with the S&P 500’s 18.87X and the sector’s 10.93X.
Over the past five years, the industry has traded as high as 9.03X and as low as 5.77X, with the median being 7.01X, as the charts below show.
EV-to-EBITDA
3 Staffing Stocks Poised for Growth
We have presented three stocks that are expected to grow in the near term.
Kelly Services: This company provides workforce solutions to different industries. KELYA is riding primarily on the Motion Recruitment Partners’ buyout, driving its top line. In the second quarter of 2025, the education business showed strength and recorded 5.3% year-over-year organic growth, led by consistent high demand and enhanced fill rates in K-12 staffing.
The Enterprise Talent Management segment witnessed robust organic growth in non-staffing solutions, mainly in Payroll Process Outsourcing and outcome-based offerings, aiming at verticals like semiconductors and manufacturing. KELYA's strategic shift to these niche areas to derive growth highlights an inclination toward higher-margin businesses, which can offset the broader market weaknesses.
Kelly currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its 2025 earnings has been unchanged at $2.15 per share in the past 60 days. Kelly Services shares have moved up by 6.3% in the past six months.
Heidrick & Struggles International: This company offers executive search, consulting and on-demand talent services to businesses and global business leaders. HSII has achieved a strong performance during the June-end quarter on the back of its focus on its compelling and integrated growth opportunities across Executive Search, consulting and on-demand talent.
The company is capitalizing on major changes, including the need for clients to adjust business strategies due to changes in geopolitics and AI. This is forcing the company to rethink its organizational leadership and work. HSII’s internal growth strategy involves boosting the number of highly productive individuals and improving their productivity via development and analytic technology.
HSII currently has a Zacks Rank #3. The Zacks Consensus Estimate for the 2025 earnings has been unchanged at $2.99 per share in the past 60 days. Heidrick & Struggles International shares have gained 50.9% in the past six months.
Price & Consensus: HSII
DLH Holdings: This company provides tech-enabled business process outsourcing, program management solutions, and public health research and analytics services across the U.S. DLHC is inclined toward funding the surge in tech integration and advanced solutions in cybersecurity.
AI, machine learning, data analytics and cloud computing are key areas of investment that promise long-term growth. The combination of these advanced technologies and scientific expertise applied to engineering, robotics and aircraft systems delivers mission-critical results. Management is bullish on the company’s expected buyout reforms to enhance the procurement process, aiding in converting the current pipeline into contract wins and guiding the company toward strong recovery and growth in 2026.
DLHC currently carries a Zacks Rank #3. The Zacks Consensus Estimate for the fiscal 2025 earnings has been unchanged at 17 cents per share in the past 60 days. DLH Holdings' shares have swelled 56.4% in the past six months.
Price & Consensus: DLHC
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Here Are 3 Staffing Stocks to Consider Despite Industry Woes
The Staffing Firms industry is anticipated to reach the pre-pandemic levels gradually, allowing companies to pay out regular dividends. The swift adoption of remote work and hybrid models, backed by top-notch technological advancements, will drive the demand for staffing agencies. Kelly Services (KELYA - Free Report) , Heidrick & Struggles International (HSII - Free Report) and DLH Holdings (DLHC - Free Report) are benefiting from technological developments that improve efficiency.
Industry Description
The Zacks Staffing industry is a diverse sector encompassing companies that offer a comprehensive range of human resources and workforce solutions. These services cover various aspects of personnel management, including employment screening, recruitment services for both temporary and long-term job placements, retirement planning, human capital management, payroll administration, performance evaluation, organizational planning and financial management. Some firms within this industry provide specialized services, such as staffing and risk consulting, professional staffing and global business solutions tailored to the needs of small to medium-sized enterprises. They also offer organizational consulting services with a worldwide reach, catering to a wide and varied client base, which includes domestic and international businesses across different sectors and industries.
What's Shaping the Future of the Business Services Industry?
Stable Demand: The industry is mature. The consistency in demand for services has been strong for a while despite challenges in the manufacturing sector. Revenues, income and cash flows are expected to recover to the pre-pandemic levels gradually, allowing most industry players to pay out stable dividends.
Increasing Adoption of Remote Work & Hybrid Models: A significant boost in remote work has been witnessed since the pandemic, and it has made staffing agencies focus on flexible staffing solutions, including hybrid and remote work models. These adaptations assist clients and job-seekers to enjoy a better work-life balance. Given the continued demand for remote work, staffing agencies are expected to prioritize and meet evolving workplace preferences efficiently.
Tech-Driven Staffing Solutions on the Rise: The staffing sector is implementing technological advancements to optimize operations, boost efficiency and deliver services at their highest quality. The rising adoption of AI-driven tools and platforms makes attracting, evaluating and onboarding IT talents more effective. The increasing acceptance of social media and Big Data is being witnessed as well. Video-conferencing platforms, such as Zoom and Microsoft Teams, help in remote communication, and cloud and blockchain technologies improve HR data security. Such technological advancements ensure that the demand for staffing services continues.
Zacks Industry Rank Indicates Sluggish Near-Term Prospects
The Zacks Staffing Firms industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #219. This rank places it in the bottom 10% of 243 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates a continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and current valuation.
Industry Lags Sector & S&P 500
The Zacks Staffing Firms industry has underperformed the S&P 500 and the broader sector over the past year.
The industry has declined 35.6% against the S&P 500 composite’s growth of 19% and the broader sector’s marginal rise in the same timeframe.
1-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 5.77X compared with the S&P 500’s 18.87X and the sector’s 10.93X.
Over the past five years, the industry has traded as high as 9.03X and as low as 5.77X, with the median being 7.01X, as the charts below show.
EV-to-EBITDA
3 Staffing Stocks Poised for Growth
We have presented three stocks that are expected to grow in the near term.
Kelly Services: This company provides workforce solutions to different industries. KELYA is riding primarily on the Motion Recruitment Partners’ buyout, driving its top line. In the second quarter of 2025, the education business showed strength and recorded 5.3% year-over-year organic growth, led by consistent high demand and enhanced fill rates in K-12 staffing.
The Enterprise Talent Management segment witnessed robust organic growth in non-staffing solutions, mainly in Payroll Process Outsourcing and outcome-based offerings, aiming at verticals like semiconductors and manufacturing. KELYA's strategic shift to these niche areas to derive growth highlights an inclination toward higher-margin businesses, which can offset the broader market weaknesses.
Kelly currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its 2025 earnings has been unchanged at $2.15 per share in the past 60 days. Kelly Services shares have moved up by 6.3% in the past six months.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: KELYA
Heidrick & Struggles International: This company offers executive search, consulting and on-demand talent services to businesses and global business leaders. HSII has achieved a strong performance during the June-end quarter on the back of its focus on its compelling and integrated growth opportunities across Executive Search, consulting and on-demand talent.
The company is capitalizing on major changes, including the need for clients to adjust business strategies due to changes in geopolitics and AI. This is forcing the company to rethink its organizational leadership and work. HSII’s internal growth strategy involves boosting the number of highly productive individuals and improving their productivity via development and analytic technology.
HSII currently has a Zacks Rank #3. The Zacks Consensus Estimate for the 2025 earnings has been unchanged at $2.99 per share in the past 60 days. Heidrick & Struggles International shares have gained 50.9% in the past six months.
Price & Consensus: HSII
DLH Holdings: This company provides tech-enabled business process outsourcing, program management solutions, and public health research and analytics services across the U.S. DLHC is inclined toward funding the surge in tech integration and advanced solutions in cybersecurity.
AI, machine learning, data analytics and cloud computing are key areas of investment that promise long-term growth. The combination of these advanced technologies and scientific expertise applied to engineering, robotics and aircraft systems delivers mission-critical results. Management is bullish on the company’s expected buyout reforms to enhance the procurement process, aiding in converting the current pipeline into contract wins and guiding the company toward strong recovery and growth in 2026.
DLHC currently carries a Zacks Rank #3. The Zacks Consensus Estimate for the fiscal 2025 earnings has been unchanged at 17 cents per share in the past 60 days. DLH Holdings' shares have swelled 56.4% in the past six months.
Price & Consensus: DLHC