What's In Store For Robert Half (RHI) This Earnings Season?

Robert Half International Inc. (NYSE:RHI) is expected to report its first-quarter 2017 results on Apr 20, 2017. The question lingering in investors’ minds is, whether this global staffing firm will be able to post a positive earnings surprise in the to-be-reported quarter. The company’s earnings have lagged the Zacks Consensus Estimate in two of the trailing four quarters, with an average miss of 1.5%.

A glimpse of Robert Half’s stock performance shows that its shares increased 16.9% over the past six months, underperforming the Zacks categorized Staffing industry’s gain of 22.6%.

Let’s delve deeper how things are shaping up for this announcement.

Which Way Are Estimates Treading?

Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate for the first quarter and 2017 has been stable over the last 30 days. However, the Zacks Consensus Estimate of 58 cents for the first quarter reflects a year-over-year decline of 9.4%. Further, analysts polled by Zacks expect revenues of $1.27 billion for the said quarter, down 2.5% from the year-ago quarter.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Robert Half is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Robert Half has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 58 cents. Although the company’s Zacks Rank #3 increases the predictive power of ESP, we need a positive Earnings ESP in order to be confident about an earnings surprise.

Factors Influencing the Quarter

We note that the company’s sales have missed the Zacks Consensus Estimate in seven of the past eight quarters due to decline in the U.S. staffing revenues. Currency headwinds are also denting its sales.

In addition, a tightening U.S. job market continues to put pressure on the labor supply, particularly at higher skill levels. Further, lower margins, currency fluctuations and rising health care costs remain concerns for Robert Half. In fact, lower margins, especially at Protiviti, are expected to take a toll on Robert Half’s profits.

Nevertheless, the company has been experiencing higher demand for services provided by the skilled professionals. Moreover, Protiviti is also adding to year-over-year revenue gains, which seem to be quite encouraging. Further, Protiviti has an impressive growth outlook due to a robust regulatory environment as well as increased need for stronger internal controls and data security measures.

Moving ahead, Robert Half anticipates its first-quarter earnings in the range of 55–61 cents per share. Also, management expects revenues in the range of $1.250–$1.310 billion.

Stocks Poised to Beat Earnings Estimates

Here are some companies in the Business Services sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Everi Holdings Inc. (NYSE:EVRI) has an Earnings ESP of +42.86% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Booz Allen Hamilton Holding Corp. (NYSE:BAH) has an Earnings ESP of +2.33% and a Zacks Rank #2.

Stantec Inc. (TO:STN) has an Earnings ESP of +9.38% and a Zacks Rank #3.

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