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Why Investors Should Retain Robert Half (RHI) Stock for Now

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Robert Half International Inc. (RHI - Free Report) is benefiting from its wholly-owned subsidiary, Protiviti, as well as software initiatives. RHI has a long-term (three to five years) expected earnings growth rate of 6.4%.

Factors That Augur Well

Protiviti, the company’s wholly-owned subsidiary, through which, it offers internal audit, technology consulting, digital transformation, legal consulting, and risk and compliance consulting services, is in good shape. The first quarter of 2023 was the 22nd quarter of consecutive revenue growth for Protiviti. Revenues of $494 million were up 4.6% year over year. Adjusted gross margin came in at 23.2%.

Robert Half has been utilizing a major share of its capital expenditure on investments in software initiatives and technology infrastructure. Further, the company continues to invest in digital technology initiatives designed to enhance the service offerings to both clients and candidates. Technology investments, a broad and deep client, as well as candidate database, and network scope and global scale are likely to drive long-term growth for the company.

Commitment to shareholder returns makes Robert Half a reliable way for investors to compound wealth over the long term. In 2022, 2021 and 2020, it paid $189.3 million, $170.6 million and $155.9 million in dividends and repurchased shares worth $319.9 million, $287.7 million and $277.5 million, respectively. Such initiatives not only instill investors’ confidence but also positively impact the company's earnings.

Robert Half is witnessing an increase in expenses due to a rise in staff compensation costs and heavy investments in technology initiatives. Hence, the company's bottom line is likely to remain under pressure going forward.

Some Risks

Robert Half’s current ratio (a measure of liquidity) was 1.38 at the end of fourth-quarter 2022, lower than 1.82 at the prior-quarter end and the prior-year quarter’s 1.67. The gradual decline in the current ratio does not bode well for the company.  

Zacks Rank and Stocks to Consider

Robert Half currently carries a Zacks Rank #3 (Hold). Investors interested in the Zacks Business Services sector can consider the following better-ranked stocks:

Maximus (MMS - Free Report) : MMS carries a Zacks Rank of 2 (Buy) at present and has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company has an impressive earnings surprise history, beating the consensus mark in three of the trailing four quarters and missing once, the average surprise being 9.6%.

Green Dot (GDOT - Free Report) : GDOT currently carries a Zacks Rank #2 and has a VGM Score of A.

The company has an impressive earnings surprise history, beating the Zacks Consensus Estimate in all the trailing four quarters, with an average surprise of 37.3%.


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