A prudent investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
Robert Half International Inc. (RHI - Free Report) has performed extremely well in the past year and has the potential to sustain the momentum in the near term. Consequently, if you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes it an Attractive Pick?
An Outperformer: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse in the past year. Shares of Robert Half havereturned a massive 44%, which compares favorably with the industry’s gain of 26.3%.
Solid Rank & VGM Score: Robert Half currently carries a Zacks Rank #2 (Buy) and a Value Growth Momentum Score (VGM Score) of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the last 60 days, the Zacks Consensus Estimate for current quarter earnings increased 4.9%. Estimates for 2018 and 2019 moved up 4.3% and 5.1%, respectively.
Positive Earnings Surprise History: Robert Half’s earnings surpassed the Zacks Consensus Estimate in two of the previous four quarters, delivering an average positive earnings surprise of 2.4%.
Strong Growth Prospects: The Zacks Consensus Estimate for current quarter earnings is pegged at 85 cents, indicating year-over-year growth of 32.8%. Moreover, earnings are expected to register 29.6% and 9.9% growth, respectively, in 2018 and 2019.
Growth Factors: Robert Half has been investing heavily to tap the evolving prospects in the technology staffing area. Notably, revenues from Robert Half Technology rose nearly 2% to $160.1 million in first-quarter 2018. Such efforts will continue to boost the top line. A major portion of its capital expenditures include investments in software initiatives and technology infrastructure, both of which are important to the company’s future growth opportunities. Major software initiatives include upgrades to enterprise resource planning and project management applications, which were completed in 2017. Further, the company remains focused on investing in digital innovation initiatives to better serve customers by integrating its traditional professional staffing services with customers digital experience.
Also, the company’s temporary staffing services have been on the rise globally. This is because employers are building flexible staffing options in human resources plans. Notably, revenues from temporary and consulting staffing divisions grew 7% to $97 million in first-quarter 2018. Revenues for the first two weeks of April were up 7.6%.
Unemployment rate of 3.8% in May is the lowest in 18 years. Moreover, the U.S. economy added 223,000 jobs in May, significantly higher than 164,000 in April and 103,000 in March. Monthly job additions have averaged 191,000 in the past year.Robust manufacturing and non-manufacturing activities further boost optimism about the growing U.S. economy. All these factors seem to be working in favor of Robert Half, which saw its U.S. revenues rise sequentially in first-quarter 2018. Global Staffing U.S. revenues climbed 7% to $1,183 million.
Additionally, lower tax rates as a result of the new tax law (Tax Cuts and Jobs Act, effective since Dec 22, 2017) is another major positive. For 2018, the effective tax rate is expected in the range of 26-28%, which is likely to boost the company’s bottom line. Reduced taxes will likely lead to greater retention of profits, which will help the company allocate more capital for its overall business growth.
We are also impressed by Robert Half’s endeavors to reward its shareholders. In fact, it has an impressive dividend payment history. On May 1, the company’s board of directors declared a quarterly cash dividend of 28 cents per share, payable on Jun 15, 2018, to shareholders of record as of May 25, 2018. On Feb 13, the quarterly cash dividend was raised by 4 cents to 28 cents per share. On the same day, additional 10 million shares were authorized for repurchase. In first-quarter 2018, Robert Half bought back 1.1 million shares for $60 million, with 11.3 million shares still available for buyback under the stock repurchase program.
In 2017, Robert Half returned $231.72 million to its shareholders in the form of dividends and made share repurchases worth $121.00 million. In 2016, the company paid $176.03 million of dividend and repurchased shares worth $114.16 million. In 2015, the company returned $271.14 million to its shareholders through dividend payments and bought back $107.56 million of shares. Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business.
Other Stocks to Consider
Some other top-ranked stocks in the broader Business Services sector include Heidrick & Struggles International, Inc. (HSII - Free Report) , Insperity, Inc. (NSP - Free Report) and BG Staffing, Inc. (BGSF - Free Report) . Heidrick & Struggles and Insperity sport a Zacks Rank #1 while BG Staffing currently carries a Zacks Rank #2,
The long-term expected earnings per share growth rate for Heidrick & Struggles, Insperity and BG Staffingis 13.5%, 18% and 20%, respectively.
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