Earnings Beat: Robert Half International Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Shareholders might have noticed that Robert Half International Inc. (NYSE:RHI) filed its quarterly result this time last week. The early response was not positive, with shares down 8.8% to US$51.67 in the past week. It looks like a credible result overall - although revenues of US$1.2b were in line with what the analysts predicted, Robert Half International surprised by delivering a statutory profit of US$0.67 per share, a notable 16% above expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Robert Half International
Following last week's earnings report, Robert Half International's 13 analysts are forecasting 2021 revenues to be US$5.37b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 5.4% to US$3.02. Before this earnings report, the analysts had been forecasting revenues of US$5.38b and earnings per share (EPS) of US$2.90 in 2021. So the consensus seems to have become somewhat more optimistic on Robert Half International's earnings potential following these results.
The consensus price target rose 6.9% to US$54.25, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Robert Half International analyst has a price target of US$68.00 per share, while the most pessimistic values it at US$39.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Robert Half International's revenue growth will slow down substantially, with revenues next year expected to grow 0.6%, compared to a historical growth rate of 3.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.0% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Robert Half International.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Robert Half International's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Robert Half International's revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Robert Half International going out to 2022, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Robert Half International that you need to take into consideration.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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