Headhunter Korn/Ferry (NYSE:KFY) reports its fiscal Q2 2008 earnings results Thursday morning. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.

What analysts say:

  • Buy, sell, or waffle? Eight analysts follow Korn/Ferry, giving it two buy ratings, six holds, and a sell.
  • Revenue. On average, they're looking for 16% revenue growth, to $190.6 million.
  • Earnings. In contrast, profits are predicted to grow slightly less than 10%, to $0.34 per share.

What management says:
If it's true that actions speak louder than words, then a Fool has to wonder what Korn/Ferry was telling us when it increased its stock buyback program last month. The additional $50 million ups the total repurchase authorization to $125 million. Logically, if management were expecting a weak showing in Thursday's report, it would have held off on the buyback until after the news. (Then again, the devil's advocate in me is whispering: "Perhaps they were just getting the authorization out of the way, preparing to pounce when the stock sells off on Thursday?")

In unrelated news, Korn/Ferry announced a bit of a coup in October, when it successfully poached away the CFO of Motley Fool Stock Advisor recommendation Resources Global (NASDAQ:RECN).

What management does:
While we're certainly sad to see the loss of a key exec at one of our stock picks, I must say that the CFO in question, Stephen Giusto, picked a propitious time to job-hop. After declining for more than a year, margins at Korn/Ferry finally halted their slide last quarter. If Giusto can just manage to "do no harm," he should be able to gain some credit as his new employer's profitability forms a new, upward trend. Why, with just a little work, Korn/Ferry may be able to overtake Heidrick & Struggles (NASDAQ:HSII) in the operating margins race (both these firms already greatly outclass rivals Gevity HR (NASDAQ:GVHR), CDI (NYSE:CDI), and Hudson Highland (NASDAQ:HHGP)).






















All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
What could prevent Korn/Ferry from overtaking its rival, and cutting short the burgeoning trend toward strengthening margins? A weaker economy. And based on this morning's news out of the Institute for Supply Management, that looks like a real possibility. According to ISM, its "factory index" declined from 50.9 to 50.8 in November, indicating that the U.S. manufacturing sector is now just a hair's breadth from contraction. ISM's inventory index declined to 46.9 from 47.2. And the employment index fell to 47.8 from 52.0 in October. Meanwhile, Bank of America (NYSE:BAC) yesterday issued a report opining, "The services side of the economy is likely to reverse its October rise."

How important are "services" to our economy, and by extension, the employment market that is Korn/Ferry's bread and butter? Pretty darn important. "Services" account for nearly 90% of the U.S. economy, giving rise to a (potential) new saying: "As the Hair Cuttery goes, so goes the economy."

How has Korn/Ferry's year been going so far? Find out in:

Fool contributor Rich Smith does not own shares of any company named above. Bank of America is an Income Investor recommendation. Resources Global is a Stock Advisor recommendation. The Motley Fool has a well-coiffed disclosure policy.