Robert Half (RHI)

Specialized talent solutions company Robert Half (NYSE:RHI) met Wall Street’s revenue expectations in Q3 CY2025, but sales fell by 7.5% year on year to $1.35 billion. Its GAAP profit of $0.43 per share was in line with analysts’ consensus estimates.

Company Overview

With roots dating back to 1948 as the first specialized recruiting firm for accounting and finance professionals, Robert Half (NYSE:RHI) provides specialized talent solutions and business consulting services, connecting skilled professionals with companies across various fields.

The Professional Staffing & HR Solutions subsector within Business Services is set to benefit from evolving workforce trends, including the rise of remote work and the gig economy. With companies casting a wider net to find talent due to remote work, the expertise of staffing and recruiting companies is even more valuable. For those who invest wisely, the use of predictive AI in recruitment and screening as well as automation in HR workflows can enhance efficiency and scalability. On the other hand, digitization means that talent discovery is less of a manual process, opening the door for tech-first platforms. Additionally, regulatory scrutiny around data privacy in HR is evolving and may require companies in this sector to change their go-to-market strategies over time.

Robert Half competes with other specialized staffing firms like ManpowerGroup (NYSE:MAN), Kforce (NASDAQ:KFRC), and Heidrick & Struggles (NASDAQ:HSII), as well as with general staffing companies like Adecco Group (SWX:ADEN) and Randstad (AMS:RAND). In the consulting space, Protiviti faces competition from firms like Accenture (NYSE:ACN) and the Big Four accounting firms.

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $5.46 billion in revenue over the past 12 months, Robert Half is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To accelerate sales, Robert Half likely needs to optimize its pricing or lean into new offerings and international expansion.

As you can see below, Robert Half struggled to increase demand as its $5.46 billion of sales for the trailing 12 months was close to its revenue five years ago. This shows demand was soft, a poor baseline for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Robert Half’s recent performance shows its demand remained suppressed as its revenue has declined by 9.4% annually over the last two years.

This quarter, Robert Half reported a rather uninspiring 7.5% year-on-year revenue decline to $1.35 billion of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below average for the sector.

Robert Half was profitable over the last five years but held back by its large cost base. Its average operating margin of 8.3% was weak for a business services business.

Analyzing the trend in its profitability, Robert Half’s operating margin decreased by 8.1 percentage points over the last five years. Robert Half’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Robert Half generated an operating margin profit margin of 1%, down 3.1 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Robert Half, its EPS declined by 11.6% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

Diving into the nuances of Robert Half’s earnings can give us a better understanding of its performance. As we mentioned earlier, Robert Half’s operating margin declined by 8.1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Robert Half, its two-year annual EPS declines of 40.9% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Robert Half reported EPS of $0.43, down from $0.64 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Robert Half’s full-year EPS of $1.54 to grow 27.2%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Robert Half has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.3% over the last five years, better than the broader business services sector. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.

Taking a step back, we can see that Robert Half’s margin dropped by 1.5 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Robert Half hasn’t been the highest-quality company lately because of its poor revenue and EPS performance, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 39.1%, splendid for a business services business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Robert Half’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

Robert Half is a profitable, well-capitalized company with $365.3 million of cash and $244 million of debt on its balance sheet. This $121.3 million net cash position is 4.1% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

Revenue and EPS were roughly in line with Wall Street's estimates. Overall, this quarter didn't have many surprises, good or bad. The stock remained flat at $29.64 immediately after reporting.

Updated: December 3, 2025 at 11:34 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Robert Half, you should also grasp the company’s longer-term business quality and valuation.

Robert Half falls short of our quality standards. To begin with, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its stellar ROIC suggests it has been a well-run company historically, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its projected EPS for the next year is lacking.

Robert Half’s P/E ratio based on the next 12 months is 18.1x. At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $34.67 on the company (compared to the current share price of $27.43).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.