We reaffirm our Neutral recommendation on
Robert Half International, Inc.
) despite a solid second quarter 2013 as we remain concerned
about the continued weakness in international markets.
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Why the Reiteration?
Robert Half's earnings and revenues beat the Zacks Consensus
Estimate in the second quarter. Earnings of 46 cents per share
increased 21.1% from the prior-year quarter, driven by solid
demand for skilled professionals in the U.S. with improving
Especially the permanent placement, information technology
staffing and in Protiviti operations of the company are
benefiting from improving demand. Margins also improved on the
back of lower operating expenses.
Robert Half has sound fundamentals. The company has been
witnessing strong demand for specialized staffing and consulting
services, particularly in the U.S. Further, the improving global
economic condition has increased demand for the company's
temporary and permanent staffing services and risk consulting and
internal audit services.
However, Robert Half has significant international presence, with
25% of its revenues from its operations abroad. A strong dollar
is negatively impacting export sales.
In addition, weak staffing demand outside the U.S., especially in
Europe, due to an uncertain economic condition resulted in soft
revenues in the second quarter. Revenues increased only 3.4% year
over year and 1% on a constant currency basis.
Further, we believe that currency headwinds and a tough job
scenario, particularly in Europe, are denting the demand for
recruitment services. In addition, cost savings and headcount
reduction measures taken by other companies adversely affect
placement firms like Robert Half.
Other Stocks to Consider
Robert Half holds a Zacks Rank #3 (Hold). Other stocks that are
performing well and are worth considering in the business
services sector include
), all with a Zacks Rank #1 (Strong Buy).
(We are reissuing this article to correct a mistake. The
original article, issued Wednesday, Sept 11, 2013, should no
longer be relied upon.)