What Does Kelly Services, Inc.'s (NASDAQ:KELY.A) Share Price Indicate?

Kelly Services, Inc. (NASDAQ:KELY.A), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$18.84 and falling to the lows of US$15.29. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Kelly Services' current trading price of US$16.27 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Kelly Services’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Kelly Services

Is Kelly Services Still Cheap?

Good news, investors! Kelly Services is still a bargain right now. According to my valuation, the intrinsic value for the stock is $25.00, but it is currently trading at US$16.27 on the share market, meaning that there is still an opportunity to buy now. However, given that Kelly Services’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can We Expect Decent Returns From Kelly Services?

What kind of returns can we expect from Kelly Services in the future? It’s one thing to get a stock at a low price, but the quality of the company is even more important, as its stock may be cheap or expensive for a reason. A way to assess stock quality is by looking how much it returns to you as the investor compared to how much you’re invested. Kelly Services is expected to return 5.5% of your investment next year if you buy the stock today. This is a pretty average return, which doesn’t significantly add much to the case for owning the stock.

What This Means For You

Are you a shareholder? Although KELY.A is currently undervalued, the low future return begs the question – is there a better opportunity elsewhere? Think about whether you want to increase your portfolio exposure to KELY.A, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on KELY.A for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Since it is currently undervalued, now is a great time to make a decision. But keep in mind the low future return, and whether the opportunity cost of investing in KELY.A versus another stock is worth it.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To help with this, we've discovered 3 warning signs (1 makes us a bit uncomfortable!) that you ought to be aware of before buying any shares in Kelly Services.

If you are no longer interested in Kelly Services, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.