Can Robert Half (RHI) Make A Comeback On Solid Labor Market?

With improving economic and labor market conditions, hiring services in the United States have gradually picked up pace. Moreover, rising levels of competition across several industries globally, have triggered companies to seek professional level talent for fulfilling human resource needs, leading to the recruitment of highly-skilled employees.

However, Robert Half International Inc (NYSE:RHI) , one of the world’s leading staffing solutions provider, is yet to reap significant gains from the improving staffing industry conditions. The company has been facing sluggishness across its segments owing to weak hiring activity. While it has been investing heavily in improving its software and technology capabilities, the company is still waiting to achieve a turnaround.

Let’s now take a closer look at some of the factors impacting Robert Half’s performance.

Weak Hiring Trend in The Domestic Market

Despite a stable U.S. economic environment and a stronger job market, the hiring cycle remains lengthy as employers take more time for hiring decisions, which is negatively affecting the company’s profits. In fact, Robert Half’s Global Staffing Division revenues declined 2.2% and 3% year over year, during the first and second quarters of 2017, respectively. Although the hiring segment saw positive impacts from the growth in revenues from its international operations, the same were insufficient to offset the decline in revenues from domestic operations.

Protiviti Fails to Deliver Results

Protiviti is the wholly-owned subsidiary of Robert Half, offering varied risk consulting and audit services. Of late, the segment has been depicting weakness owing to declining margins and fewer high-margin clients. Soft revenues from the international operations of Protiviti had also pulled down the overall revenues of the company, when it released second-quarter 2017 results.

Growth Prospects

In an effort to counter ongoing challenges and gain opportunities for growth, Robert Half, that shares space with Insperity, Inc (NYSE:NSP) , BG Staffing, Inc (NYSE:BGSF) and DLH Holdings Corp (NASDAQ:DLHC) , has been heavily investing in technology infrastructure and implementing improved software systems. Major software initiatives include upgrades to enterprise resource planning applications and the implementation of a global, cloud-based customer relationship management application.

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. More than half of the new-job growth predicted through 2020 is expected to come from the temporary staffing arena

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