Will Robert Half Continue To Gain From Better Hiring Trends?

With improved hiring trends across the United States and rising demand for professional staffing services, internationally, Robert Half International (NYSE:RHI) is well poised for growth. In fact, upbeat labor market trends aided the company in ending 2017 on a strong note. Incidentally, both the top and bottom lines improved year over year and beat the Zacks Consensus Estimate during fourth-quarter 2017.

Let’s delve into some of the factors that have been favoring the company’s performance.

Favorable U.S Hiring Trends Offer Scope for Growth

Considering the lower U.S. unemployment levels, which indicate that companies are increasingly adding new jobs, the demand for professional staffing services has been on the rise. Evidently, Global Staffing U.S. revenues climbed 2% to $863 million. Also, management provided an insight into the trends so far. Temporary and consulting staffing revenues grew 3.3% in the first two weeks of January and were affected by the recent East Coast storms. For the first three weeks of January, revenues from permanent placement division advanced 11.9% year over year. We hope that Robert Half will continue to prosper in its domestic operations as the overall economic and labor market conditions look positive.

Strong International Business

Robert Half’s international operations have been a promising area for growth for a while. The company’s international revenues continued to increase year over year in the fourth quarter, backed by increasing demand for its professional staffing services. In fact, currency-neutral staffing revenues from the international regions rose 15% to $269 million and the same at Protiviti surged 23% to $41 million.

Tax Reforms Expected to Boost Profitability

We are optimistic Robert Half’s performance, following its updates on the recently enacted tax reforms. The company expects effective tax rates for 2018 in the range of 26-28%, which is likely to boost the bottom line. Also reduced taxes are expected to lead to greater retention of profits, which will help the company allocate more funds toward corporate reformation and development efforts.

From a broader perspective, the latest tax-cuts are likely to aid companies invest more toward expansion, opening doors for increased hiring activity. This is likely to boost Robert Half’s business, further.

Initiatives to Continue on Growth Track

Robert Half, which shares space with Insperity, Inc (NYSE:NSP) , BG Staffing, Inc (NYSE:BGSF) and DLH Holdings Corp (NASDAQ:DLHC) , has been heavily investing in technology infrastructure and implementing improved software systems. Major software initiatives include upgrades to enterprise resource planning applications and the implementation of a global, cloud-based customer relationship management application. Further, the company continues to invest in digital technology initiatives designed to enhance the service offerings to clients and candidates. In this regard, Robert Half concluded the global rollout of its CRM software in 2017, while it also launched a website recently.

Wrapping it up, we expect Robert Half’s dedicated efforts to widen its international and domestic operations, which will aid the company sustain growth in the forthcoming periods.

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