It has been about a month since the last earnings report for Robert Half (RHI Quick QuoteRHI - Free Report) . Shares have lost about 0.2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Robert Half due for a breakout? 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 catalysts.

Robert Half Q2 Earnings Fails to Beat Estimates

Robert Half reported lower-than-expected second-quarter 2023 results.

Quarterly earnings of $1 per share missed the consensus mark by 11.5% and declined 37.5% year over year. Revenues of $1.64 billion beat the consensus mark by 2.8% and decreased 12% year over year.

Talent Solutions Revenues Down, Protiviti Falls

Talent Solutions’ revenues of $1.5 billion decreased 16% year over year on an as-adjusted basis. U.S. Talent Solutions’ revenues of $885 million were down 17% year over year. Non-U.S. Talent Solutions revenues decreased 9% year over year on an adjusted basis to $263 million.

Protiviti revenues came in at $491 million, down 1% year over year on an as-adjusted basis. U.S. Protiviti revenues of $386 million declined 2% year over year on an adjusted basis. Non-U.S. Protiviti revenues of $105 million increased 4% year over year on an as-adjusted basis.

The quarter had 63.3 billing days compared with 63.4 billing days in the year-ago quarter. At present, Robert Half operates 318 talent solutions locations worldwide, with 87 locations situated in 18 countries outside the United States. Currency exchange rate movements decreased total revenues by $3 million.

Margins Contract

Adjusted gross profit in the quarter was $665.4 million, down 17.2% year over year. This compares with our expectation of an adjusted gross profit of $688 million, down 14.4% year over year.

The adjusted gross profit margin of 40.6% declined 260 basis points year over year. This compares with our expectation of an adjusted gross profit margin of 41%, down 220 basis points year over year.

Key Balance Sheet and Cash Flow Figures

Robert Half ended the quarter with a cash and cash equivalent balance of $722.7 million compared with the $547.7 million witnessed at the previous-quarter end. The company generated $281 million of cash from operations while capital expenditures were $9.7 million. It paid out $51 million in dividends and repurchased shares worth $45 million in the reported period.

Q3 Guidance

For the third quarter of 2023, Robert Half expects revenues of $1.48-$1.58 billion. EPS is expected between 76 cents and 90 cents.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -24.81% due to these changes.

VGM Scores

Currently, Robert Half has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Robert Half has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.