What To Expect From Robert Half (RHI) In Q3 Earnings?

Robert Half International, Inc. (NYSE:RHI) is set to report third-quarter 2016 results after the market closes on Oct 19. Last quarter, this global staffing firm posted a negative earnings surprise of 2.74%.

Robert Half has delivered positive earnings surprises in one quarter, a negative surprise in another and in-line earnings in the remaining two of the last four quarters, resulting in an average negative surprise of 0.33%.

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

Factors to Consider

Estimates have largely remained unchanged ahead of the company’s third-quarter earnings release. Though Robert Half has witnessed strong year-over-year earnings growth since the past many quarters, driven by solid demand for services provided by skilled professionals as well as a growing labor market in the U.S., the company cannot escape from currency fluctuations and macro-economic pressures. Also, it is expected to incur higher costs in the near term.

Nevertheless, we are encouraged by the recently released 2017 Salary Guides by Robert Half which shows rising demand for skilled professionals.

Protiviti also has an impressive growth outlook due to a robust regulatory environment and increased need for stronger internal controls and data security measures. However, lower margins, especially at Protiviti, are expected to take a toll on profits.

In the third quarter, Robert Half expects revenues in the range of $1.335–$1.395 billion, compared with the prior-year quarter revenues of $1.31 billion on a reported basis. The company expects earnings in the range of 68–74 cents per share, compared with the year-ago earnings of 73 cents per share.

Earnings Whispers

Our proven model does not conclusively show that Robert Half is likely to beat earnings this quarter. This is because 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. That is not the case here as you will see below.

Zacks ESP: Earnings ESP for Robert Half is +1.41% as the Most Accurate estimate of 72 cents is higher than the Zacks Consensus Estimate of 71 cents.

Zacks Rank: Robert Half carries a Zacks Rank #4 (Sell).We caution against stocks with a Zacks Rank #4 or 5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Stocks in the consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank, and are therefore worth considering include:

Sanderson Farms, Inc. (NASDAQ:SAFM) with an Earnings ESP of +9.62% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tyson Foods, Inc. (NYSE:TSN) with an Earnings ESP of +9.48% and a Zacks Rank #2.

The J.M. Smucker Company (NYSE:SJM) with an Earnings ESP of +1.03% and a Zacks Rank #3.

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