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Kelly Services Needs To Pivot From Comfortable Focus-Metrics If They Hope To Break Through The $24 Stock Price Ceiling.

|Includes: Kelly Services, Inc. (KELYA)

Summary

Kelly Services' stock goes through 3-4 year cycles of low teens to low $20's

Kelly Services focuses on Revenue, GP and SG&A as key metrics

Different metrics provide better correlation to stock price

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….

DISCLAIMER

The information provided in the above article is for informational purposes only.  It should not be considered financial, investment or any other advice. You should consult with a financial professional to determine what may be best for your individual needs. The author and ThinkHill, LLC do not make any guarantee or other promise as to any results that may be obtained from using the above content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. To the maximum extent permitted by law, the author and ThinkHill, LLC disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. Content contained in this article or affiliated with the author or ThinkHill, LLC is not intended to and does not constitute investment advice and no relationship is formed. Any information, commentary, analysis, opinions, advice and/or recommendations are provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of any information, commentary, analysis, opinions, advice and/or recommendations, and without warranty of any kind, express or implied, including, but not limited to, warranties of performance, merchantability, and fitness for a particular purpose. The use of this information is at your own risk.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.