On Sep 26, 2014, we issued an updated research report on Robert Half International Inc (RHI).
This global staffing firm reported second-quarter 2014 results on Jul 24 wherein it delivered earnings of 55 cents per share, which was ahead of the prior-year quarter adjusted earnings by 19.6%. Earnings also beat the Zacks Consensus Estimate by 5.8%. In fact, the company’s earnings have now grown in double digits for 17 consecutive quarters on a year-over-year basis, driven by growing demand for skilled workforce and consulting services.
Robert Half's total revenue was in line with the Zacks Consensus Estimate but grew 9.6% year over year to $1.16 billion in the second quarter.
The company has been recording strong revenues since the past three years, driven primarily by broad-based and increasing demand for the company’s professional staffing services, particularly in the U.S. With the current improvement in the labor market, the company expects to generate accelerated revenues in the near term. The company’s international operations are also improving, most notably in Europe, owing to growing demand for permanent placement services.
Robert Half’s subsidiary Protiviti is also one of the key drivers of revenue and operating performance at Robert Half. It helps companies solve problems in finance, technology, operations, governance, risk and internal audit. The company expects the momentum to continue in the upcoming quarters with an expected improvement in the economy in the second half of 2014 and beyond.
However, the demand for permanent placement services is more sensitive to economic and labor market conditions than demand for temporary and consulting staffing services. Though permanent placement staffing revenues increased in the first half of 2014, the company expects weakness in permanent placement services, going ahead.
Fluctuations in currency values also have an adverse impact on the profitability of the company, as Robert Half derives a considerable portion of revenues from foreign countries.
In addition, a prolonged economic downturn has been putting pressure on almost every business in the U.S. In fact, the company expects results to be hurt by general macroeconomic conditions in the upcoming quarters.
Key Picks from the Sector
Other stocks in the staffing industry worth considering include CTPartners Executive Search Inc. (CTP), AMN Healthcare Services Inc. (AHS) and On Assignment Inc. (ASGN).
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