A month has gone by since the last earnings report for Robert Half (RHI Quick QuoteRHI - Free Report) . Shares have added about 8.3% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Robert Half Tops Q3 Earnings and Revenues Estimates

Robert Half reported impressive third-quarter 2020 results, with earnings and revenues beating the Zacks Consensus Estimate.

Quarterly earnings of 67 cents per share beat the consensus mark by 11.7% but were down 33.7% year over year. Revenues of $1.19 billion surpassed the consensus mark by 2.5% but declined 23.2% year over year on a reported basis and 23.9% on an as-adjusted basis.

Staffing Revenues Decline, Protiviti Up

Global Staffing revenues of $869 million declined 31% year over year on a reported as well as as-adjusted basis. U.S. staffing revenues of $666 million were down 32% on a reported and as-adjusted basis. Non-U.S. staffing revenues declined 28% on a reported basis and 29% on an as-adjusted basis to $203 million.

The quarter had 64.3 billing days compared with 64.1 billing days in the year-ago quarter. 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 $321 million, which increased 4% year over year on a reported basis and 6% on an as-adjusted basis. U.S. Protiviti revenues of $260 million increased 11% year over year on a reported basis and 10% on an as-adjusted basis. Non-U.S Protiviti revenues of $61 million declined 5% on a reported basis and 8% on an as-adjusted basis.

Currently, Protiviti, along with its independently owned Member Firms, has a network of 86 locations in 27 countries.

Margins Shrink

Gross profit in the quarter was $467 million, down 27% year over year. Gross margin of 38.2% shrunk 230 basis points year over year. Operating income of $77 million was down 52.8% year over year. Operating margin declined to 6.5% from the year-ago quarter’s 14.6%.

Key Balance Sheet & Cash Flow Figures

Robert Half ended the third quarter with cash and cash equivalents of $587 million compared with $502 million witnessed at the end of the previous quarter. Cash flow from operations was $139 million and capital expenditures were $7 million in the quarter. Robert Half paid out $38 million in dividends and repurchased shares worth $24 million in the reported period.

Q4 Guidance

For the fourth quarter of 2020, Robert Half expects revenues in the range of $1.155 billion to $1.255 billion. Earnings per share are expected between 55 cents and 75 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 5.76% due to these changes.

VGM Scores

Currently, Robert Half has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Robert Half has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.