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What's in Store for Robert Half (RHI) This Earnings Season?

Robert Half InternationalRHI is set to report third-quarter 2015 results after the market closes on Oct 21. Last quarter, this global staffing firm posted a positive surprise of 1.52%. In fact, Robert Half has delivered positive earnings surprises in the last four quarters, with an average surprise of 2.92%.

Factors to Consider

Strong revenue growth boosted by broad-based and increasing demand for the company's professional staffing services, particularly in the U.S. have proved to be Robert Half's strength for the past four years. Also, the company's earnings have grown in double digits for 21 consecutive quarters on a year-over-year basis, driven by growing demand for skilled workforce and consulting services.

In the third quarter, Robert Half expects revenues in the range of $1.295-$1.345 billion, representing an increase of 8% on a reported basis and 12% on a constant currency basis. The company also expects earnings in the range of 70 - 75 cents per share, which implies a growth rate of 15% from the comparable period last year.

Robert Half's subsidiary Protiviti is one of the key drivers of revenues and operating performance. It helps companies solve problems in finance, technology, operations, governance, risk and internal audit. The company expects the momentum to continue in the soon-to-be reported quarter with an improving economy. The company's international operations have also improved over time, particularly driven by higher demand for staffing and consulting services.

However, fluctuations in currency values have an adverse impact on the profitability of the company, as Robert Half derives a considerable portion of revenues from foreign countries.

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, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: ESP for Robert Half is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 73 cents per share.

Zacks Rank #2 (Buy): Robert Half's Zacks Rank #2 when combined with an ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

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

Flower Foods Inc. FLO , with an Earnings ESP of +4.17% and a Zacks Rank #2.

The J. M. Smucker Company SJM , with an Earnings ESP of +0.66% and a Zacks Rank #2.

Pinnacle Foods, Inc. PF , with an Earnings ESP of +2.22% and a Zacks Rank #3 (Hold).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SMUCKER JM (SJM): Free Stock Analysis Report

ROBT HALF INTL (RHI): Free Stock Analysis Report

PINNACLE FOODS (PF): Get Free Report

FLOWERS FOODS (FLO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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