Robert Half (RHI) Benefits From Strength In Staffing Industry

Shares of Robert Half International Inc. (NYSE:RHI) have gained 13.3% in the past year against the 3.9% decline of the industry it belongs to.

The company recently posted strong third-quarter 2018 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Earnings per share (EPS) of 95 cents beat the Zacks Consensus Estimate by 4 cents and increased 39.7% year over year. Total revenues of $1.46 billion outpaced the consensus mark by $5 million and improved 10.7% year over year on a reported basis and 11.1% on an adjusted basis.

Robert Half has an impressive earnings surprise history. The company’s earnings beat estimates in all of the trailing four quarters, the average being 5.4%. In the past 30 days, the Zacks Consensus Estimate for fourth-quarter earnings have been revised 5.8% upward.

Let’s delve in to the factors that are driving Robert Half.

A Strong Economy Driving the Staffing Industry

The staffing industry is currently benefiting from a strong economy, leading to robust manufacturing and non-manufacturing activities, and higher corporate spending post the tax reform. Owing to these factors, the company posted 7.7% year-over-year increase in U.S. staffing revenues on a reported basis and 7.4% on an adjusted basis in third-quarter 2018 results. The labor market has been witnessing record low unemployment levels and strong job additions since the beginning of 2018.

Robert Half International Inc. Revenue (TTM)

Protiviti, the company’s subsidiary through which it offers risk consulting, internal audit and information technology consulting services, is strongly positioned in the market. The subsidiary is benefiting from growing demand for its internal audit and internal control solutions. With a very strong pipeline, Protiviti currently is a double-digit margin and revenue performer.

Technology Investments

Robert Half has been utilizing a significant chunk of its capital expenditures as investments toward software initiatives and technology infrastructure, as they offer growth opportunities. Major software initiatives include upgrades to enterprise resource planning applications and the implementation of a global, cloud-based customer relationship management application. Digital technology initiatives are designed to enhance the service offerings to clients and candidates.

Zacks Rank & Other Stocks to Consider

Currently, Robert Half is a Zacks Rank #2 (buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the broader Business Services sector include Paychex, Inc. (NASDAQ:PAYX) , Genpact Ltd. (NYSE:G) and WEX Inc. (NYSE:WEX) , each carrying a Zacks Rank #2. The long-term expected EPS (three to five years) growth rate for Paychex, Genpact and WEX is 8.5%, 10% and 15%, respectively.

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