In this commentary, I will examine Robert Half International Inc.'s (NYSE:RHI) latest earnings update (31 December 2019) and compare these figures against its performance over the past couple of years, as well as how the rest of the professional services industry performed. As an investor, I find it beneficial to assess RHI’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
Could RHI beat the long-term trend and outperform its industry?
RHI's trailing twelve-month earnings (from 31 December 2019) of US$454m has increased by 4.6% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 6.3%, indicating the rate at which RHI is growing has slowed down. To understand what's happening, let’s take a look at what’s transpiring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Robert Half International has invested its equity funds well leading to a 40% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19% exceeds the US Professional Services industry of 6.0%, indicating Robert Half International has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Robert Half International’s debt level, has declined over the past 3 years from 50% to 45%.
What does this mean?
Though Robert Half International's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Robert Half International gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Robert Half International to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RHI’s future growth? Take a look at our free research report of analyst consensus for RHI’s outlook.
- Financial Health: Are RHI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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