Why Kelly Services' Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of staffing company Kelly Services (NASDAQ: KELYA  ) fell as much as 12% today after the company reported earnings.

So what: Revenue fell 1.5% from a year ago to $1.38 billion but was slightly ahead of Wall Street estimates. Investors are focusing on the bottom line today, where adjusted earnings per share were $0.33, a penny below expectations.  

Now what: The one-penny earnings miss may not seem like a lot, but when a company's revenue is declining, investors pay special attention to margins and the bottom line. Management says it is positioned well in the highly skilled market but isn't very bullish on job growth short-term, so there's reason to be cautious. I don't see either the earnings improvement or the value to buy today, so I'm staying away from the stock.

Interested in more info on Kelly Services? Add it to your watchlist by clicking here


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