RHI short pitch:
– Global specialty staffing firm that trades above peers and operates within the cyclical industry.
– Consensus earnings are too optimistic given the FED’s expectation of higher unemployment.
– Pandemic-driven surge from the public sector is already runoff.
– Challenged by a broad-based slowdown in the pace of client hiring, especially among SMBs, a longer sales cycle, and more stringent hiring requirements.
– Cyclical employment pressures, partially driven by FED policies, are likely to intensify.
RHI valuation:
– Relative to peer group, trades at ~20% premium on a EBITDA multiple basis and ~15% premium on a P/E basis.
– In previous cycles the stock bottomed at c. 8x-12x peak EPS.
– At 10x current peak EPS, RHI is worth $60/share.
Exp. gain: 20% to $60/share.
Full write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/ROBERT_HALF_INTL_INC/3657980237