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Kforce Stock: A Competent Proxy For The U.S. Tech Employment Market

Mar. 04, 2021 2:29 PM ETKforce Inc. (KFRC)


  • KFRC could benefit from both short-term and long-term trends in the US tech temp employment market.
  • KFRC has an impressive financial profile.
  • COVID-related businesses continue to hamper the progression of the gross profit margins, and increased tech unionization is a long-term risk.
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It’s now over a year since the advent of the pandemic, and while some industries in the US economy have returned to pre-pandemic levels, the broad US employment market is still some way from the pre-pandemic norm of over 7 million job openings. However, as pointed out in The Lead-Lag Report last month, the most recent job-openings number was quite encouraging and reiterated the ongoing progress in the employment market terrain.

If you’d like to tap into the ongoing employment market recovery and are looking out for suitable equity options, you may consider looking at Kforce Inc. (NASDAQ:KFRC) - a professional staffing services firm that offers employment solutions both on a temporary and permanent basis. According to SIA, KFRC is one of 15 large publicly-traded specialty staffing firms. Unlike some of its listed peers that have exposure to other global employment markets, KFRC is very much an American-centric business with 100% of its revenue coming from the domestic market.

Temporary employment services leading the recovery

Source: FRED

Data from the non-farm payroll release shows that temporary employment continues to ramp up at a faster pace than permanent employment. I suppose this is to be expected, as businesses are still dealing with the aftermath of the pandemic and an uncertain economic outlook. Considering the wobbly outlook, it would be prudent to not make any definitive large-scale permanent employment-related decisions and rather move ahead with some flexibility in the employment cost base until things become clearer. Now, why should this matter to KFRC, you ask? Well, temporary-based placement has accounted for ~97% of KFRC's topline over the past three years (Source: Annual Report), so the current economic and business conditions are ideal for a temp staffing firm of this ilk.

Tech focus

A key aspect that differentiates KFRC from its peers is

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This article was written by

Michael A. Gayed, CFA profile picture
Michael A. Gayed is portfolio manager, and author of five award-winning research papers on market anomalies and investing. He has a BS with a double major in Finance & Management from NYU Stern School of Business, and is a CFA Charterholder. Michael runs the investing group The Lead-Lag Report, focused on helping investors outperform in all market conditions. It offers a tactical, data-driven approach to investing, to achieve long-term success even in the face of uncertainty. With increasing market volatility, it's essential to understand risk-on/risk-off signals, seize high-yield opportunities, and leverage award-winning research to maximize returns. Learn More.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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