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Kforce (KFRC) to Report Q2 Earnings: What's in the Cards?

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Staffing company Kforce Inc. (KFRC - Free Report) is scheduled to report second-quarter 2017 results after market close on Aug 1.

In the last reported quarter, Kforce posted in-line earnings of 23 cents. The company topped earnings estimates thrice in the trailing four quarters with an average positive earnings surprise of 4.94%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Kforce provides professional and technical specialty staffing services and solutions globally. The company continues to divest non-core operations and invest the proceeds in higher-growth markets.

During the quarter, the company set up a new $300 million revolving credit facility with a syndicate led by Wells Fargo Bank, N.A. The new credit facility will expire in May 2022, replacing the existing $170 million asset-based revolving credit facility. This facility is likely to have a positive impact on the company’s revenues in the upcoming quarter.

KForce expects skilled technology demand to be high as companies are becoming increasingly dependent on the efficiencies provided by technology and the need for innovation and strategies. Particularly, technology investment, mobility, cloud computing, cyber security, eCommerce, digital marketing, big data and business intelligence contributed to the demand landscape for technology resources.

Advancement in these areas is likely to be critical across all industries for companies to remain competitive and meet the evolving customer expectations. The company’s business is subject to government regulations and licensing. The failure to obtain all necessary licenses or approvals could adversely affect Kforce’s financial results. In addition, softness in the labor market and increased competitive pressure remain concerns for the company.

Due to a challenging macroeconomic environment, Kforce has been facing significant declines in a few of its largest clients over the past few quarters. Business disruption and internal organizational challenges faced by these clients impacted its overall revenues and are likely to remain concerns in the impending quarter as well.

Management expects to continue making selective investments in revenue-generating talent. The company believes that with the current mix of tenure in its talent population and improved productivity levels from investments, there is still ample opportunity to increase revenues.

Earnings Whispers

Our proven model does not conclusively show that Kforce is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for successful earnings beat. This is not the case here as you will see below:

Zacks ESP:  Kforce has an Earnings ESP of 0.00%. This is because both Most Accurate estimate and Zacks Consensus Estimate stand at 46 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kforce, Inc. Price and EPS Surprise


Kforce, Inc. Price and EPS Surprise | Kforce, Inc. Quote

Zacks Rank: Kforce has a Zacks Rank #3. This when combined with a 0.00% ESP makes earnings prediction uncertain.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Crestwood Equity Partners LP (CEQP - Free Report) , with an Earnings ESP of +160.00%, and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Railcar Industries, Inc. (ARII - Free Report) , with an Earnings ESP of +8.07%, and a Zacks Rank #2.

Apple Inc. (AAPL - Free Report) , with an Earnings ESP of +1.27%, and a Zacks Rank #3.

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