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Robert Half (RHI) Likely to Bounce Back: Should You Hold?

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Robert Half International Inc. (RHI - Free Report) has been grappling with numerous headwinds of late.  A decline in U.S. staffing revenues and a tightening job market continues to put pressure on the skilled-labor supply.

The stock has underperformed the Zacks categorized Staffing Market industry over the past one year. While the stock yielded 11.5%, the industry gained 22.2% in the said time frame. On the other hand, the broader Consumer Staple sector grew 14.0% in the same time frame.

What’s Wrong with the Stock?

Robert Half reported weaker-than-expected fourth-quarter 2016 earnings and revenues last month owing to currency headwinds. The company's total revenue declined 3.1% year over year in the fourth quarter, due to a fall in U.S. staffing revenues. Earnings fell 14.1% as the company’s clients are taking longer to make hiring decisions.

Also, a tightening U.S. job market continues to put pressure on the skilled-labor supply. In fact, this marked the second consecutive quarter of earnings decline in the last 26 quarters.

Nevertheless, international staffing operations have performed well during the quarter. Protiviti also reported year-over-year revenue gains. Moreover, the company has been experiencing higher demand for services provided by skilled professionals. Further, employers are building flexible staffing options in their human resources plans, which are resulting in temporary staffing growth.

Robert Half International is the world's largest specialized provider of temporary and permanent personnel in the fields of accounting and finance.  With an improving economic picture, the company expects to generate accelerated global revenues in the near term. A VGM score of 'A' and a long-term earnings growth rate of 15.5% also make the stock appealing.

Companies like Heidrick & Struggles International, Inc. (HSII - Free Report) , Kforce, Inc. (KFRC - Free Report) and Cross Country Healthcare, Inc. (CCRN - Free Report) share the same industry space.

While Heidrick & Struggles has long-term earnings growth rate of 11.50%, Kforce and Cross Country Healthcare have an average positive earnings surprise of 3.94% and 29.58%, respectively.

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