Over at the U.S. Department of Labor, look for the hits to keep on coming. Two months ago, we saw headhunting firm Korn/Ferry
Based on the earnings report just out from temporary staffer Kforce
In the second quarter of 2005, Kforce reported that its revenues surged more than 30% against Q2 2004. And like Korn/Ferry in June, Kforce was pleased as punch to inform investors of just how well that revenue growth played out on the firm's bottom line. Overall firm-wide profits skyrocketed nearly 22 times. Unfortunately, continued stock dilution watered down that profits increase before earnings reached the per-share level. But even after the firm's share count expanded by more than 16% year over year, profits per diluted share still came in at $0.14 per share -- a remarkable increase over Q2 2004's $0.01 a share.
Speaking of dilution, it's worth pointing out that the company did buy back 751,000 shares of its common stock in Q2 -- and did so at a very nice price by paying, on average, $7.87 per share. Yet despite those buybacks, the company's share count nonetheless increased, not only by the staggering 16% year-on-year amount noted above, but also (in a much more muted manner) sequentially against Q1 2005.
So yes, Kforce, it's great that you're buying back shares. And yes, it certainly looks like you bought them at a bargain. Keep up the good work with that (and with the revenue and profits growth, too, of course), but don't expect any shareholder adulation for another few quarters. I doubt it will be forthcoming until the year-on-year comparisons of diluted shares outstanding have had time to scroll off the side of your income statement.
Read about the Force, Luke, in:
- It's Warp Speed for Kforce
- Staffer Shoots for Stars
- Employment Stocks to Rise?
- Kforce Comes Out Fighting
Fool contributor Rich Smith does not own shares in any company named above.