Corporate Staffer Robert Half Is a Total Bargain - Barron's

Negative sentiment surrounding the corporate staffing industry amid credit-market woes and the possibility of a U.S. recession has seen shares of leading recruiter Robert Half International Inc. (RHI) drop 38% since February. Barron's says the decline looks overdone. While economists peg the odds of a 2008 recession at about 30%, the decline in staffing stocks reflects a 75% probability, analysts say. Furthermore, a recent poll showed 10% of 1,400 companies surveyed expect to add accounting/finance staffers (Half's specialty) in 2008, while only 4% foresee job cuts. Despite its share decline, Half is enjoying a strong year, with overall revenue increases of 15%, including a 17.5% gain at its largest unit ("Accounttemps"), and EPS up over 8%. Half has almost no debt and $329M in cash, which should allow it to continue share buybacks. Shares trade at a low 14.7x 2007 earnings and an even lower 12.8x 2008 estimated earnings.

Deutsche Bank analyst Brandt Sakakeeny says he's shocked by the beating Half has taken: "Never have I seen a cyclical stock trading at such a low level relative to the 2008 and '09 numbers that I expect to see. This company has a great track record and superior management, qualities that I think will allow it to weather -- and continue to invest through -- any downturn," he says. Shares ($26) should rebound to $40 next year. Barron's says they won't be this cheap forever.

Additional Reading: Pay Attention To Staffing Stocks

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Comments

[The Red:]

Having worked with Robert Half for many years as a top level consultant, in addition, they placed me at my last 3 permanent positions. I can say my experience with them has gone downhill. One longtime top partner in a major market that I personally worked with left because of poor treatment to join a fast growing competitor. I understand that has been true in a few major markets. This business is driven by top personalities. My RHI market has certainly suffered with that person leaving. I still have my name in the Robert Half pool, but the difference is now I get poor follow-through, frequent jobs mismatched to my qualifications (all far under my qualifications), and a persistent turnover of staff dealing with my account so no one knows me or has a commitment to get me placed. In fact, I haven't been placed in anything by Robert Half since that manager left. My point is that the market may not be so rosy about management as you are and may take into account new, aggressive and successful competitors such as Vaco, LLC.

2008 Jan 14 03:50 PM