Robert Half International Placed a Good Quarter

This sleepy stock continues to improve profitability and earnings per share, and its international segment seems to have turned the corner.

Apr 26, 2014 at 11:30AM

Robert Half International (NYSE:RHI) reported a solid first quarter. Total revenue increased 5.8%, to $1.1 billion, and earnings per share increased 13%, to $0.45, besting analyst estimates by $0.01. This marked the 16th consecutive quarter of double-digit earnings-per-share growth. Below are my four key takeaways from the quarter.

1. Strong sales growth at home and abroad
Sales growth was stronger both domestically and internationally. Keeping in line with recent trends, domestic results were better. Staffing revenue in the United States grew 6.4%. Weak employment in Europe has been a consistent drag on growth -- international staffing revenue fell every quarter in 2013. But we may have hit a bottom, as international revenue didn't fall this quarter. It actually increased, though only by a minuscule amount -- 0.1%.

2. Profitability continues to improve
The big story at Robert Half isn't sales growth, it's about improving profitability. During the lows of the Great Recession, the company's profits fell dramatically. In 2009, the company reported 2.2% operating margins. Since then, the company has expanded margins every year. In this quarter, operating margins increased 9.4%. That's why the company has four years of double-digit growth in profits.

3. The balance sheet remains rock solid
The company has $268 million in cash and only $1.3 million in debt. And the business model doesn't require large investments in physical capital to fund growth. This allows the company to pay out excess cash to shareholders. During the quarter, the company repurchased 825,000 shares. The diluted share count today is 1.6% lower than a year ago. And the company pays a 1.7% dividend.

4. Management is predicting a brighter future
According to CEO Harold Messmer, demand for staffing services is strong, and it's actually been accelerating in the past few months. Even Europe, a perpetual weak spot, is improving. Here's what he said on the earnings call:

Demand for our professional staffing services and Protiviti consulting solutions remained solid during the first quarter, with growth rates accelerating in March and so far in April. We were also pleased to see higher staffing demand outside the United States, including Europe.

And, the long-term trend toward temporary workers seems to be playing out. Businesses are increasing employing temporary staff, especially domestically. Here's how Messmer describes the trend:

The first quarter saw the number of temporary workers as a percentage of total U.S. employment exceed the all-time high established in 2000. More and more businesses appreciate the value of interim staff to better manage variable workloads and specialized project demands.

Foolish Bottom Line
Robert Half continues to report respectable, if unspectacular results. Its profitability continues to increase, and earnings per share continue to march upward at double-digit rates. During the past year, the stock has generated a total return of 33% -- nicely outpacing the S&P 500, which returned 22%. Of course, the future of the company is heavily dependent on employment levels, but the trends seem positive.

Three stocks to own for the rest of your life
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Brendan Mathews has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information