Headhunter Korn/Ferry
What analysts say:
- Buy, sell, or waffle? Nine analysts follow Korn/Ferry, with ratings unchanged from last quarter: three buys, and six holds.
- Revenues. On average, they're looking for 19% revenue growth to $163.3 million.
- Earnings. Likewise with profits: 19% growth, and $0.32 per share, are predicted.
What management says:
CEOs are usually loath to wax emotional in their quarterly earnings reports, preferring cautious enthusiasm instead. Not so with CEO Paul Reilly, however; last year, he exulted about the "exciting times at Korn/Ferry." In addition to strong global demand for talent, Reilly said he saw good things ahead: "... [We] have been pleased with the favorable acceptance by our clients to our non-search related offerings. Despite normal year-end seasonality, we are optimistic about the second half of our Fiscal Year."
What management does:
Sales grew 24% on average in the last couple of quarters, and Korn/Ferry did a fair job of holding the line on overhead, keeping its costs rising not much faster (about 25% year over year). Result: operating margins that remain firmly tethered to the 14th percentile.
|
4/05 |
7/05 |
10/05 |
1/06 |
4/06 |
7/06 |
|
|---|---|---|---|---|---|---|
|
Operating |
13.8% |
14.1% |
14.1% |
14.0% |
14.2% |
14.1% |
|
Net |
8.1% |
8.4% |
8.5% |
9.6% |
10.8% |
10.5% |
One Fool says:
Korn/Ferry's been having the most trouble with rising costs -- the same place that rival Heidrick & Struggles
Speaking of which, I want to highlight one looming threat to Korn/Ferry, to Heidrick, and indeed, to all the firms whose stock in trade is providing workers to a booming economy, including Spherion
On Monday, the Institute for Supply Management issued a downbeat report on the U.S. economy for February. Business activity in the service sector clocked in at 54.3, down from 59.0 in January. That's still an expanding economy, mind you -- anything higher than 50 is supposed to be good -- but it does suggest that the economy is cooling off. "Services" account for about 80% of the U.S. economy, giving rise to a (potential) new saying: "As the Hair Cuttery goes, so goes the economy."
Speaking of which, how are Spherion, Manpower, and Kforce doing these days? Find out in:
Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.
