It has been about a month since the last earnings report for Robert Half (
RHI Quick Quote RHI - Free Report) . Shares have added about 2.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Robert Half due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Robert Half Surpasses Q2 Earnings Estimates, Revenues Miss
Robert Half International reported mixed second-quarter 2020 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Quarterly earnings of 41 cents per share beat the consensus mark by 17% but were down 58% year over year. Revenues of $1.11 billion missed the consensus mark by 1.6% and declined 27% year over year on a reported basis and 26% on an as-adjusted basis.
Staffing Revenues Decline, Protiviti Up Global Staffing revenues of $840 million declined 34% year over year on a reported basis and 33% on an as-adjusted basis. This decline was mainly due to the negative impact of COVID-19 on staffing operations. U.S. staffing revenues of $640 million were down 34% on an adjusted basis. Non-U.S. staffing revenues were down 31% on an as-adjusted basis to $184 million. Currency movements had an unfavorable impact of 0.6% on staffing revenues.
The quarter had 63.4 billing days, flat with the year-ago quarter’s tally. At present, Robert Half operates 326 staffing locations worldwide, with 88 locations situated in 17 countries outside the United States.
Protiviti revenues came in at $284 million, which increased 4% year over year on a reported basis and 4.5% on an as-adjusted basis. This increase was driven by strength in solutions offerings and pipeline. U.S. Protiviti revenues increased 6% year over year on an as-adjusted basis while non-U.S Protiviti revenues declined 2%.
Currency movement lowered revenue growth by 0.6% on a year-over-year basis. Currently, Protiviti, along with its independently owned Member Firms, has a network of 86 locations in 27 countries.
Costs Escalate, Margins Shrink
Gross profit in the quarter was $423 million, down 34% year over year. Gross margin of 38.2% shrunk 380 basis points (bps) year over year. Operating income of $58 million was down 63.5% year over year. Operating margin declined to 5.3% from the year-ago quarter’s 10.5%.
Selling, general and administrative expenses as percentage of total revenues were 32.9%, up 140 bps year over year. The upswing resulted from negative leverage as revenues declined in response to the pandemic.
Key Balance Sheet & Cash Flow Figures
Robert Half ended the first quarter with cash and cash equivalents of $502 million, compared with the $250 million witnessed at the end of the previous quarter. Cash flow from operations was $301 million and capital expenditures were $8 million in the quarter. In the quarter, Robert Half paid out $38 million in dividends.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 8.76% due to these changes.
Currently, Robert Half has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Robert Half has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.