Since the early days of the COVID-19 pandemic, a labor shortage in almost all sectors has been one of the primary contributors to global logistical gridlock. Current record-high inflation, owing in degrees to the Russia-Ukraine war and rising COVID-19 cases in several countries, is fueling further uncertainty in the labor market. Demand for skilled labor in the U.S. remains high, with companies desperately fishing for candidates to optimize business outputs. According to Future Market Insights, the global talent acquisition and staffing technology and services market is estimated to grow at a 5.7% CAGR through 2028.

In addition, the “Great Resignation” trend continues as employees continue to search for better paying or more convenient jobs. According to Willis Towers Watson’s 2022 Global Benefits Attitudes Survey, 44% of employees are “job seekers.” Ahead of the optimistic earnings season, staffing services stocks are attracting major investor attention as demand for labor multiplies. Amid declining birth rates and an aging population, the need for popular staffing services companies will only rise to fill up positions in big companies.

Therefore, we think fundamentally strong staffing services stocks Robert Half International Inc. (RHI) and Randstad N.V. (RANJY) could be solid bets now.

Robert Half International Inc. (RHI)

RHI in Menlo Park, Calif., provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. The company operates through three segments: Temporary and Consultant Staffing; Permanent Placement Staffing; and Risk Consulting and Internal Audit Services. 

On Jan. 27, 2022, M. Keith Waddell, RHI’s president and CEO, said, “We are proud that our commitment to diversity, equity and inclusion efforts has earned us recent recognition, including placement on the Bloomberg Gender Equality Index and the Human Rights Campaign’s list of Best Places to Work for LGBTQ+ Equality.”

RHI’s service revenues came in at $1.77 billion for the fourth quarter, ended Dec. 31, 2021, up 35.7% year-over-year. Its net income came in at $167.94 million, up 77.9% year-over-year, while its EPS came in at $1.51, up 79.8% year-over-year.

Analysts expect RHI’s revenue to increase 12.9% year-over-year to $7.30 billion in 2022. Its EPS is estimated to increase 12.7% to $6.04 in 2022. It surpassed the EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 32% in price to close Friday’s session at $112.44.

RHI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

RHI has an A grade for Quality and a B grade for Growth. Within the A-rated Outsourcing – Staffing Services industry, it is ranked #6 out of 18 stocks. Click here to see the additional POWR Rating for Value, Momentum, Stability, and Sentiment for RHI.

Randstad N.V. (RANJY)

Headquartered in Diemen, the Netherlands, RANJY provides solutions in the field of work and human resources (HR) services. It offers temporary staffing and permanent placement services for the light industrial, office and administrative, manufacturing, and logistical and other specialty areas, along with payroll services.

On April 21, 2022, RANJY announced its plans to acquire Side, a leading end-to-end digital staffing platform in France. Pierre Mugnier, co-founder and CEO of Side, said, “We’re looking forward to joining forces with the Randstad Group’s talented teams and combining our online user experience expertise with the world’s largest HR services provider.”

For the fourth quarter, ended Dec.31, 2021, RANJY’s revenue increased 18.6% year-over-year to €6.75 billion ($7.25 billion). Its EBITA came in at €324 million ($347.99 million), up 39.7% year-over-year. The company’s EPS was  €1.29, up 16.2% year-over-year.

RANJY’s revenue is expected to be  $29.94 billion for its  fiscal period ending Dec. 31, 2023, representing a 3.5% year-over-year rise. The stock closed Friday’s session at $28.21.

It is no surprise that RANJY has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Value and a B grade for Stability.

RANJY is ranked #10 in the Outsourcing – Staffing Services industry. Click here to see the additional POWR Ratings for RANJY (Growth, Momentum, Sentiment, and Quality).

RHI shares were trading at $108.82 per share on Monday morning, down $3.62 (-3.22%). Year-to-date, RHI has declined -2.06%, versus a -11.51% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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