Professional staffing solutions provider Kforce Inc (NASDAQ:KFRC) has been a benefactor of the jobs boom and the post-pandemic reopening trend. The domestic technology staffing firm is right at the core of the hottest talent segment and operating on all cylinders. The Company is a strong proponent of the elastic office and remote work as being a part of the new normal. As COVID vaccinations accelerate, momentum should continue to accelerate as well as the recovery in the labor force and economics gets underway. Prudent investors seeking exposure in the jobs recovery boom can watch shares of Kforce for opportunistic pullbacks for entries.
Q2 FY 2021 Earnings Release
On Aug. 3, 2021, Kforce released its fiscal second-quarter 2021 Kforce for the quarter ending June 2021. The Company reported an earnings-per-share (EPS) profit of $1.00 excluding non-recurring items versus consensus analyst estimates for a profit of $0.91, a $0.09 beat. Revenues grew 17.7% year-over-year (YoY) to $403.61 million beating analyst estimates for $392.09 million. Technology flex revenues on a sequential on a billing day basis rose 9.4% and 21.5% on a YoY basis. FA flex revenue rose 2.7% YoY and Direct Hire revenue rose 85.6% YoY. The Company ended the quarter with $17.3 million net cash, up from $1.3 million in March 2021.
CEO Commentary
Kforce CEO Daniel Dunkel commented:
“We believe the significant strength in our financial results leading into, during and now after the pandemic continues to reinforce the wisdom of our strategic decision to focus our business on domestic technology staffing and solutions. Our Technology business demonstrated remarkable resilience in 2020 when revenues were essentially flat, and we have built tremendous momentum since shortly after the pandemic began and into the early stages of the third quarter. The momentum is evident not only in our organic 21% year-over-year Technology flex revenue growth in the second quarter, a record for the Firm, but also the 17% revenue growth since the second quarter of 2019, pre-pandemic. There is no other market we would want to be focused in other than the domestic technology staffing and solutions market as it has, in our view, the greatest prospects for strong, sustained, and profitable revenue growth. I am incredibly excited about our strategic position. We have the right team in place to capture additional market share within what we believe will be a continued strong demand environment for our services.”
President Commentary on Workplace New Normal
Kforce President Joseph Liberatore commented:
“We continue to see momentum in our Technology business which should lead to third quarter year-over-year growth of approximately 25%, which would represent over 20% organic growth over the third quarter 2019, pre-pandemic. New assignment starts in Technology are not only reaching all-time highs, but they have been remarkably consistent and broad-based. We believe that this speaks volumes as to the primarily non-discretionary, mission-critical work we are performing across our blue-chip client portfolio. We are making nice progress transitioning our FA business to higher-skilled positions, such as analytics and decision-support roles, which is evident in our key performance indicators. We have made tremendous progress in advancing Kforce towards a fully integrated, technology-enabled hybrid operating model. Our future work environment in this new age we are entering will be what we are referring to as “Office Occasional” whereby our people can have the flexibility driven through trust and technology with a remote-first approach along with the opportunity to leverage collaborative physical office space for activities that are best achieved through in-person, active collaboration. I greatly appreciate the trust our clients, consultants, and candidates have placed in Kforce. Our teams continue to inspire me daily as we work together creating something beyond special for tomorrow and into the future to position Kforce as the most desirable destination for top professionals in our industry.”
Upside Guidance
The Company raised its forward guidance for Q3 2021 EPS coming in between $0.83 to $0.91 versus $0.82 consensus analyst estimates. Revenues for Q3 2021 are expected to come in between $385 million to $393 million compared to $376.38 million analyst estimates. Kforce expects gross profit market to range between 29% and 29.2% and an effective tax rate of 27.5%. The Company also raised its dividend 13% to $0.26 per share.
KFRC Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provide a precision view of the price action playing field for KFRC stock. The weekly rifle chart peaked twice off the $63.66 Fibonacci (fib) level. The weekly 5-period moving average (MA) resistance at $60.88 is starting to fall with the stochastic mini inverse pup. This could be the start of a weekly breakdown on the crossover down. The daily rifle chart formed a market structure high (MSH) sell trigger when shares fell under the $62.61 price level. The daily rifle chart is still in a make or break trying to decide whether to breakout or breakdown with the flat 5-period MA at $60.74 and 15-period MA at $61.21. Due to the erratic overshoots on the 5 and 15 period MAs on both the daily and weekly charts, KFRC can still be considered in a consolidation. The daily stochastic is also stalled near the 50 band. The daily market structure low (MSL) buy triggers above $60.97. The range between the daily MSH and MSL is very tight as well, therefore more time is needed to gauge the break. Prudent investors can monitor for opportunistic pullback levels at the $59.39 fib, $58.34 fib, $57.24 fib, $56.28 fib, $54.66 fib, and the $52.38 fib. The upside trajectories range from the $65.09 fib level up towards the $77.23 fib.
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