Is A Beat In Store For Kforce (KFRC) This Earnings Season?

Kforce Inc. (NASDAQ:KFRC) is scheduled to report fourth-quarter 2017 results after the market closes on Feb 6.

Last quarter, the company reported adjusted earnings of $11.5 million or 45 cents per share compared with adjusted earnings of $11.6 million or 44 cents per share in the year-ago quarter. Adjusted earnings per share beat the Zacks Consensus Estimate by 17 cents. The company’s financial results were hurt in the previous quarter due to the impact of hurricanes.

The company has surpassed earnings estimates once in the trailing four quarters, with an average positive earnings surprise of 2%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

KForce expects skilled technology demand to be high as companies are becoming increasingly dependent on the efficiencies provided by technology along with the need for innovation and strategies. Particularly, technology investment, mobility, cloud computing, cyber security, eCommerce, digital marketing, Big Data and business intelligence contributed to the demand landscape for technology resources.

Also, the company has completed rolling out its new customer relationship management system to all its offices during the previous quarter. This is expected to improve client services and enhance business operations going forward.

The Zacks Consensus Estimate for KForce’s fourth-quarter revenues is $340 million, higher than reported revenues of $326 million in the prior-year quarter.

Revenues from the Technology segment are expected to be higher, with estimates pegged at $226 million compared with reported revenues of $217 million in the prior-year quarter. Robust demand along with a couple of valuable new contracts secured by the company in the previous quarter make us particularly optimistic about revenues from this segment.

The Zacks Consensus Estimate for revenues from the Finance & Accounting segment is $87 million compared with reported revenues of $86 million in the prior-year quarter. The Government solutions segment is expected to generate revenues of $26.7 million compared with $23.4 million reported in the year-ago quarter.

However, due to the introduction of Tax Cuts and Jobs Act in 2017, the company is expecting an adverse impact on its earnings in the impending quarterly results.

Earnings Whispers

Our proven model conclusively shows that KForce is likely to beat earnings this quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is perfectly the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.47%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kforce, Inc. Price and EPS Surprise

Zacks Rank: KForce has a Zacks Rank #2. This increases the predictive power of ESP and makes us reasonably confident of an earnings beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Zendesk, Inc. (NYSE:ZEN) has an Earnings ESP of +9.91% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AmerisourceBergen Corporation (NYSE:ABC) has an Earnings ESP of +1.28% and a Zacks Rank #3.

The Home Depot, Inc. (NYSE:HD) has an Earnings ESP of +0.29% and a Zacks Rank #3.

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