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Robert Half Crosses Industry Mark: Will the Momentum Stay?

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Robert Half International Inc. (RHI - Free Report) hit a new 52-week high of $51.50 on Oct 2, eventually closing at $51.16. We believe that the company’s software upgrading initiatives and growth prospects in the temporary staffing arena has aided the stock to gain new highs.

Evidently, shares of this Zacks Rank #3 (Hold) company have increased 5% in the past three months surpassing the industry’s growth of 1.1%.

Let’s delve into some of the aspects that have been impacting the company’s performance lately.

Technology & Software Investments

Robert Half has been heavily investing in technology infrastructure and implementing improved software systems. A major portion of its capital expenditures are being allocated toward improving software systems. Such initiatives will ensure the company’s future growth prospects. Major software initiatives include upgrades to enterprise resource planning applications and the implementation of a global, cloud-based customer relationship management application. 

 

Growth Prospects in Temporary Staffing

Hiring cycle in the United States remains lengthy as employers take more time for hiring decisions, which is negatively affecting Robert Half’s profits. Nevertheless, Robert Half remains hopeful regarding improvements in the hiring activity in the United States as companies are increasingly using temporary and consulting professionals as part of their human resource mix. Also, the 2017 Salary Guides by Robert Half shows rising demand for skilled professionals across a range of occupations in the United States. This would aid in increasing the demand for professional staffing service providers, thus widening revenue opportunities for Robert Half.

Bottom Line

Though delay in hiring process and weakness in Protiviti segment due to declining margins and fewer high-margin clients have dented the company’s overall profitability, the company’s ongoing technology and software upgrading initiatives are expected to improve the performance of its segments. Thereby, we believe the company will be able to take advantage of the rising demand for professional staffing services internationally, going ahead.

Further, Robert Half carries a VGM Score of A, indicating its underlying strength. It is also observed that some of the key financial ratios of the company are higher than the industry levels, as depicted in the figure below.

Moreover, the Zacks Consensus Estimate has remained stable at 69 cents over the past one month, ahead of the upcoming third-quarter results. The same also lies within the management’s guidance of 66-72 cents.

Looking For More? Check These Three Picks

Investors may also consider better-ranked stocks from the same sector such as Atento S.A. (ATTO - Free Report) flaunting a Zacks Rank #1 (Strong Buy), while Accenture Plc (ACN - Free Report) and Broadridge Financial Solutions, Inc (BR - Free Report) carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Atento delivered an average positive earnings surprise of 26% in the trailing four quarters. It has a long-term earnings growth rate of 15.1%.

Accenture pulled off an average positive earnings surprise of 2.6% in the trailing four quarters. It has a long-term earnings growth rate of 10.3%

Broadridge came up with an average positive earnings surprise of 3.6% in the trailing four quarters. It has a long-term earnings growth rate of 10%

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