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Robert Half (RHI) Q3 Earnings Likely to Decline: Here's Why

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With improving economic and labor market conditions, hiring services in the United States have gradually picked up pace. However, Robert Half International Inc (RHI - Free Report) is yet to reap significant gains from such conditions. This is because the Zacks Consensus Estimate for the both the top and bottom line depicts a probable year-over-year decline.

The Consensus Estimate for third-quarter 2017, which has been stable in the last 30 days, is currently pegged at 69 cents, and is within management’s guidance of 66-72 cents per share. The consensus mark is down couple of cents from the year-ago quarter.

Robert Half, which is slated to report on Oct 24, is expected to witness a decline in net revenues owing to sluggishness in its Protiviti segment and Global Staffing Division. 

The Zacks Consensus Estimate of net revenues for the third quarter is expected to decline 0.6% to reach $1,331 million from the year-ago period. The estimated figure, however, falls within the guided range of $1,305-1,365 million for the said quarter.  We note that the company’s revenues have lagged estimates in three out of the past four quarters. On a year-over year basis, revenues have declined in the trailing three quarters.

Segment Details

Revenues in the Protiviti Division are expected to decline 9.2% in the quarter under review. This segment has been lacking high-margin clients, leading to lower revenue opportunities. Although Robert Half has been trying to achieve a turnaround in this segment through acquisitions and business agreements, they are yet bear any considerable impact upon the company’s performance.

The company’s Global Staffing Division has been struggling lately, owing to weakness in its domestic operations.

However, net services revenues from the temporary and consulting staffing arena are expected to increase approximately 1%, per analysts polled by Zacks. Of late, there is an increase in demand for temporary and consulting professionals. Additionally, higher demand for temporary workers for the upcoming holiday season is expected to benefit revenues from this division. However, the upside may not be sufficient to offset the overall declines expected at Global Staffing and Protiviti segments.

Tailwinds

In an effort to counter ongoing challenges and gain opportunities for growth, Robert Half has been heavily investing in technology. Major software initiatives include upgrades to enterprise resource planning applications and the implementation of a global, cloud-based customer relationship management application. Investors, however, need to wait and see if such initiatives revive the company’s performance.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Robert Half is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Robert Halfcarries a Zacks Rank #4 (Sell) and has an Earnings ESP of -3.37%, which makes surprise prediction difficult.

Stocks With Favorable Combinations

Here are some companies which, according to our model, also have the right combination of elements to post earnings beat this quarter:

S&P Global Inc (SPGI - Free Report) has an Earnings ESP of +3.15% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ManpowerGroup (MAN - Free Report) has an Earnings ESP of +2.21% and carries a Zacks Rank #2.

FleetCor Technologies Inc has an Earnings ESP of +0.15% and carries a Zacks Rank #2.

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