Kelly Services MUST increase their focus and improve key metrics OTHER than Revenue, Gross Profit and SG&A if they hope to break through the $24 stock price ceiling and stop the roller coaster cycle of dipping into the low teens then up to the low $20’s every 3-4 years.
Kelly Services appears to be unable to break through the $23-$24 ceiling over the last decade plus. Newly appointed CEO George Corona and shareholders alike must be growing weary of the continued cycle and likewise be demanding sustained increases in shareholder value via stock price.
But how can Kelly Services drive sustained stock price improvement?
They should consider shifting their focus from historically comfortable key metrics to those that the market as a whole values and take a data-driven approach to honing in on the metrics that provide a direct line of sight to increased shareholder value.
Different metrics (for example as determined via ThinkHill’s proprietary algorithm Predictive Value EquationTM – PVETM) appear to provide more historically accurate and statistically significant correlation to Kelly Services actual stock price than Kelly’s current focus-metrics.
For example, one of the ‘different’ metrics that ThinkHill’s PVETM suggests is Days Sales Outstanding (DSO). DSO is one of the metrics that ThinkHill’s PVETM has determined to be a driver of Kelly Services stock price. Viewed in combination with the additional elements of ThinkHill’s PVETM, Kelly Services could have a better idea as to what metrics and levers to focus on in order to correlate to increased shareholder value. Following is a historical comparison:
Kelly Services might be better served allocating scarce resources (dollars and people) to improvement projects that create positive movement in the levers that actually correlate to shareholder value (below is a sample roadmap of how ThinkHill’s PVETM provides direct line of sight to improvement projects) if they hope to achieve sustained increases in shareholder value and market capitalization.
Once they start to improve the metrics the market truly values, then they may begin to see positive momentum in their stock price. My concern is that Kelly Services’ culture may impede any necessary course corrections.
We will see….
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