Robert Half (RHI): Assessing Valuation Following Fed Rate Cut Optimism and a 5% Stock Jump

If you are watching Robert Half (RHI) after this week’s jump, you are not alone. Shares surged more than 5% after Federal Reserve Chair Jerome Powell hinted at the possibility of interest rate cuts, a signal that usually gets business services firms on investors’ radar. Lower borrowing costs tend to spur activity in staffing and consulting, opening the door for companies like Robert Half to see increased demand from clients who might have been sitting on the sidelines.

This move comes at an interesting time for Robert Half. The stock is down nearly 39% over the past year, with momentum fading through the spring and into summer, even dipping another 18% in the past three months alone. Despite the latest shot of optimism, it is part of a longer trend where investors have grown cautious, especially after a weaker operational stretch and some disappointing earnings reactions. Still, there have been bright spots, with recent recognition as a top employer and improved net income growth catching some positive attention.

So with Wall Street now cheering the macro backdrop, is Robert Half trading at a bargain, or has the recent pop already priced in renewed growth expectations?

Most Popular Narrative: 13.1% Undervalued

According to community narrative, Robert Half is considered undervalued based on analysts’ expectations for future performance and industry trends.

As businesses continue investing in digitization and business transformation, including technology modernization, AI readiness, ERP upgrades, and cybersecurity, the demand for skilled technology and finance talent is expected to remain strong. This positions Robert Half to benefit from a growing total addressable market and potentially drive future revenue growth.

Want to know the secret behind this bullish valuation? Analysts are betting on a major turnaround, supported by projections for earnings and margin expansion that could shift Robert Half’s future. Investors are watching closely. Discover what financial assumptions are factored into the price target and why the coming years could redefine expectations.

Result: Fair Value of $43.67 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent revenue declines and rising operating costs could present headwinds for Robert Half and challenge the company's turnaround hopes.

Find out about the key risks to this Robert Half narrative.

Another View: Discounted Cash Flow Signals Deeper Value

While analysts focus on earnings and margin forecasts to set price targets, our DCF model takes a different approach by factoring in long-term cash flow potential. It currently suggests the stock is trading well below estimated fair value. Could this be a hidden opportunity, or does it simply highlight a gap between models?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Robert Half for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Robert Half Narrative

If you see things differently or want to dig deeper into the numbers, you can craft your own perspective in just a few minutes. So why not do it your way?

A great starting point for your Robert Half research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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