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Technology Investments Aid RHI's Services Amid High Competition

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Robert Half Inc. (RHI - Free Report) shares have gained 22.4% in the past three months, outperforming the industry and the Zacks S&P 500 composite’s growth of 2.2% and 9.5%, respectively.

Three Months Price Performance

 

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RHI reported better-than-expected results in third-quarter 2024. Quarterly earnings of 64 cents per share beat the consensus mark by 1.6% but declined 28.9% year over year. Revenues of $1.47 billion surpassed the consensus mark by 1.7% but decreased 6.3% year over year.

How is Robert Half Performing?

Robert Half has been investing more capital in software initiatives and technology infrastructure investments. Software initiatives include upgrades to enterprise resource planning applications and implementing a global, cloud-based customer relationship management application.

The company continually invests in digital technology to improve service offerings to clients and candidates. RHI’s long-term growth is anticipated to be driven by investments in technology to enhance network scope and scale at a global level.

RHI’s wholly owned subsidiary, Protiviti, which offers risk consulting, internal audit and information technology consulting services, is performing well. It has attained Microsoft Azure's Artificial Intelligence (AI) and Machine Learning (ML) specialization, showing expertise in AI and ML within the Azure domain. This recognition implies meeting stringent requirements validated from the audit by a third party.

Protiviti enables AI adoption and the implementation of Azure-based solutions. It is positioned strongly in the market with a focus on technology consulting, cloud computing and digital transformation, generating high margins and revenues.

Robert Half has been consistently returning value to its shareholders through dividends and share repurchases. The company returned dividends of $205.91 million, $189.29 million and $170.61 million in 2023, 2022 and 2021, respectively. RHI repurchased shares worth $254.63 million, $319.9 million and $287.74 million in 2023, 2022 and 2021, respectively. These strategies instill confidence among shareholders and strengthen the company’s commitment to returning value to its shareholders.

Risks Faced by RHI

Robert Half's fall in EBITDA indicates a weak operational performance. The metric decreased 52.8% year over year in the third quarter of 2023 and 55.3% in 2022. We estimate the EBITDA to decline 40.2% in 2024.

The company operates in a highly competitive market and faces fierce competition in terms of price and reliability of service on a national, regional and local basis. In several areas, local companies are its strongest competitors.

RHI’s Zacks Rank & Stocks to Consider

Robert Half carries a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks in the broader Zacks Business Services sector are AppLovin (APP - Free Report) and Climb Global Solutions, Inc. (CLMB - Free Report) .

AppLovin sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

APP has a long-term earnings growth expectation of 20%. It delivered a trailing four-quarter earnings surprise of 26.2%, on average.

Climb Global Solutions flaunts a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 16%.

CLMB delivered a trailing four-quarter earnings surprise of 51.1%, on average.


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