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Here Are 3 Staffing Stocks to Consider Despite Industry Challenges
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The Staffing Firms industry is anticipated to recover to its pre-pandemic levels gradually, allowing companies to pay out regular dividends. The frequent adoption of remote work and hybrid models, backed by top-notch technological advancements, will drive the demand for staffing agencies. RCM Technologies, Inc. (RCMT - Free Report) , Kforce Inc. (KFRC - Free Report) and HireQuest, Inc. (HQI - 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 anticipated 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 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 #198. This rank places it in the bottom 19% 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 31.2% against the S&P 500 composite’s growth of 33.2% and the broader sector’s 15% dip in the same timeframe.
1-Year Price Performance
Industry's Current Valuation
Based on EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used to value staffing stocks given their high debt levels, the industry is currently trading at 4.94X compared with the S&P 500’s 17.95X and the sector’s 9.74X.
Over the past five years, the industry has traded as high as 8.16X and as low as 4.32X, with the median being 6.57X, 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.
RCM Technologies: This company offers specialized staffing solutions for healthcare professionals, full product lifecycle solutions and digital transformation.
RCMT ended the fourth quarter of 2025 with solid year-over-year top-line growth of 12.4%, accompanied by a bottom-line jump of 57.1%. Also, the company managed to drive revenues 14.7% year over year during 2025, leading to a 23.1% gain in the bottom line. This growth can be attributed to RCMT’s focus on AI and ML integration in the Life Sciences, Data and Solutions segment to improve predictive analytics for drug development.
The company holds a solid balance sheet position with a combined sum of $92 million in its cash and accounts receivable against a zero current debt. RCMT’s current ratio in the fourth quarter of 2025 stood at 1.85, more than the industry average of 0.96, reflecting a strong liquidity position. While the company holds a long-term debt of $25 million as of the fourth quarter of 2025, the times interest earned of 9.3 is a green flag, hinting at efficient interest coverage.
RCMT is moving on from a simple contract service provider to full lifecycle solutions, dealing with clients from initial conceptualization via execution and support. This strategy is made to create higher-margin services and more predictive revenue streams.
RCMT currently sports a Zacks Rank of 1 (Strong Buy). The Zacks Consensus Estimate for 2026 earnings per share has increased 8.6% over the past 60 days. The shares have gained 22.5% over the past six months.
HireQuest: This company is a franchisor of staffing solutions, offering temporary, contract and direct hiring services across the United States.
HQI witnessed significant operational efficiency gains during 2025. It made noteworthy strides in optimizing internal costs by reducing net workers’ compensation expenses to $89,000 in 2025 from the preceding year’s $2 million. This made a substantial impact on the bottom line, resulting in a net income of $10 million, in line with the previous year.
Management divested the majority ownership of the breakeven permanent placement to franchise owners. HQI kept the 100% ownership of the MRI contract staffing piece, which aligned closer to the franchise model. The company retained majority stakes while divesting the executive search portion that generated low margins. It supported brand growth without operational burden.
On the balance sheet front, it is impressive how the company managed to keep its liquidity high with a current ratio of 3.15 in the fourth quarter of 2025. It surpassed the industry average of 0.96. That being said, a current ratio of more than 1 indicates efficient debt coverage, which is solidified by a zero current debt as of the end of the fourth quarter of 2025.
HQI currently carries a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate for 2026 earnings per share gained 6% over the past 60 days. The company’s shares have gained 23.6% over the past six months.
Kforce: This company offers professional staffing solutions for technology, accounting and finance departments.
During the fourth-quarter 2025 earnings call, the CEO stated that sequential top-line growth per billing day in the Technology business touched its highest levels since 2022. It is a clear indication of a break from the multi-year stagnation across the broader sector.
KFRC’s data and digital practices are the fastest-growing segments, which are backed by the urgent need for data modernization and cloud migration to prepare for AI integration. The pivot to high-value, consulting-backed engagements drove double-digit demand growth. It demands higher bill rates and sound margins than traditional staffing.
Management expects to generate $7 million in annualized benefits through its organizational refinements conducted in the fourth quarter of 2025. KFRC is firm on its target of an 8% operating margin when the top line returns to $1.7 billion.
KFRC currently carries a Zacks Rank of 3 (Hold). The Zacks Consensus Estimate for 2026 earnings has been unchanged at $2.24 per share over the past 60 days. The company’s shares have gained 11% over the past six months.
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Here Are 3 Staffing Stocks to Consider Despite Industry Challenges
The Staffing Firms industry is anticipated to recover to its pre-pandemic levels gradually, allowing companies to pay out regular dividends. The frequent adoption of remote work and hybrid models, backed by top-notch technological advancements, will drive the demand for staffing agencies. RCM Technologies, Inc. (RCMT - Free Report) , Kforce Inc. (KFRC - Free Report) and HireQuest, Inc. (HQI - 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 anticipated 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 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 #198. This rank places it in the bottom 19% 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 31.2% against the S&P 500 composite’s growth of 33.2% and the broader sector’s 15% dip in the same timeframe.
1-Year Price Performance
Industry's Current Valuation
Based on EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used to value staffing stocks given their high debt levels, the industry is currently trading at 4.94X compared with the S&P 500’s 17.95X and the sector’s 9.74X.
Over the past five years, the industry has traded as high as 8.16X and as low as 4.32X, with the median being 6.57X, 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.
RCM Technologies: This company offers specialized staffing solutions for healthcare professionals, full product lifecycle solutions and digital transformation.
RCMT ended the fourth quarter of 2025 with solid year-over-year top-line growth of 12.4%, accompanied by a bottom-line jump of 57.1%. Also, the company managed to drive revenues 14.7% year over year during 2025, leading to a 23.1% gain in the bottom line. This growth can be attributed to RCMT’s focus on AI and ML integration in the Life Sciences, Data and Solutions segment to improve predictive analytics for drug development.
The company holds a solid balance sheet position with a combined sum of $92 million in its cash and accounts receivable against a zero current debt. RCMT’s current ratio in the fourth quarter of 2025 stood at 1.85, more than the industry average of 0.96, reflecting a strong liquidity position. While the company holds a long-term debt of $25 million as of the fourth quarter of 2025, the times interest earned of 9.3 is a green flag, hinting at efficient interest coverage.
RCMT is moving on from a simple contract service provider to full lifecycle solutions, dealing with clients from initial conceptualization via execution and support. This strategy is made to create higher-margin services and more predictive revenue streams.
RCMT currently sports a Zacks Rank of 1 (Strong Buy). The Zacks Consensus Estimate for 2026 earnings per share has increased 8.6% over the past 60 days. The shares have gained 22.5% over the past six months.
You can see the complete list of today’s Zacks #1 Rank stocks here.
HireQuest: This company is a franchisor of staffing solutions, offering temporary, contract and direct hiring services across the United States.
HQI witnessed significant operational efficiency gains during 2025. It made noteworthy strides in optimizing internal costs by reducing net workers’ compensation expenses to $89,000 in 2025 from the preceding year’s $2 million. This made a substantial impact on the bottom line, resulting in a net income of $10 million, in line with the previous year.
Management divested the majority ownership of the breakeven permanent placement to franchise owners. HQI kept the 100% ownership of the MRI contract staffing piece, which aligned closer to the franchise model. The company retained majority stakes while divesting the executive search portion that generated low margins. It supported brand growth without operational burden.
On the balance sheet front, it is impressive how the company managed to keep its liquidity high with a current ratio of 3.15 in the fourth quarter of 2025. It surpassed the industry average of 0.96. That being said, a current ratio of more than 1 indicates efficient debt coverage, which is solidified by a zero current debt as of the end of the fourth quarter of 2025.
HQI currently carries a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate for 2026 earnings per share gained 6% over the past 60 days. The company’s shares have gained 23.6% over the past six months.
Kforce: This company offers professional staffing solutions for technology, accounting and finance departments.
During the fourth-quarter 2025 earnings call, the CEO stated that sequential top-line growth per billing day in the Technology business touched its highest levels since 2022. It is a clear indication of a break from the multi-year stagnation across the broader sector.
KFRC’s data and digital practices are the fastest-growing segments, which are backed by the urgent need for data modernization and cloud migration to prepare for AI integration. The pivot to high-value, consulting-backed engagements drove double-digit demand growth. It demands higher bill rates and sound margins than traditional staffing.
Management expects to generate $7 million in annualized benefits through its organizational refinements conducted in the fourth quarter of 2025. KFRC is firm on its target of an 8% operating margin when the top line returns to $1.7 billion.
KFRC currently carries a Zacks Rank of 3 (Hold). The Zacks Consensus Estimate for 2026 earnings has been unchanged at $2.24 per share over the past 60 days. The company’s shares have gained 11% over the past six months.