Home Most Popular Investing Stock Analysis: Kforce Faces Challenges Amid Lower Earnings Estimates

Stock Analysis: Kforce Faces Challenges Amid Lower Earnings Estimates

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Stock Analysis: Kforce Faces Challenges Amid Lower Earnings Estimates

Kforce (KFRC) investors should closely monitor the premium they are paying for the company’s stock, as earnings estimate revisions have remained low over the past two months. The professional staffing services company recently reported weaker-than-expected Q2 results, signaling potential downside risk ahead.

Subpar Q2 Results

Despite reporting underwhelming Q2 results in late July, Kforce’s earnings estimate trend remains bleak. The company cited the uncertain economic environment as a reason for its second-quarter performance, with Q2 sales missing estimates and dropping significantly from the previous year. Earnings also fell short of expectations, marking the second consecutive quarter of disappointing results.

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Following the Q2 report, earnings estimates for fiscal 2023 and FY24 have remained lower. While Kforce’s stock is up modestly year-to-date, it has declined since the Q2 report, and lower earnings per share estimates suggest the downward trend may continue.

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Less Attractive Valuation

Kforce’s declining earnings estimates have made its price-to-earnings (P/E) valuation less attractive compared to its peers. Although the stock trades slightly below the S&P 500’s P/E ratio, it still stands at a premium compared to the Zacks Staffing Firms Industry average. Investors may want to consider alternatives within the industry, such as GEE Group (JOB) and Heidrick & Struggles International (HSII), both of which have seen their annual earnings estimates increase despite operating challenges. These stocks also trade at lower forward earnings multiples compared to Kforce.

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Bottom Line

While Kforce has potential as a meaningful investment in the business services sector, it may not be the best time to buy. Investors may want to consider staying on the sidelines and exploring other options within the Zacks Staffing Firms Industry, such as GEE Group (Zacks Rank #1) and Heidrick & Struggles International (Zacks Rank #2).

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Kforce, Inc. (KFRC) : Free Stock Analysis Report

Heidrick & Struggles International, Inc. (HSII) : Free Stock Analysis Report

GEE Group Inc. (JOB) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.