Robert Half Reaching New Highs: Hold

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Shares of global specialized staffing service Robert Half International (RHI, $45.68) began reaching new highs in late April.  The stock has not been on my buy list this year, but here’s a current assessment for investors who own shares.

Robert Half International serves corporate needs for accounting, legal, risk consulting, finance, advertising, marketing, information technology and Web design personnel.

Standard & Poor’s (S&P) commented on May 1, “We believe all segments are experiencing favorable growth trends in 2014, with demand benefiting from a slowly growing economic environment… We see sales leverage improving for remainder of
2014 with revenue growth benefits in a cyclical upturn outpacing headcount growth, despite rising wages.”

Earnings outlook:  Wall Street expects earnings per share (EPS) to rise 14%, 16% and 9% in fiscal years 2014 through 2016 (December year-end).  S&P expects revenues to rise about 8% in 2014.

The current dividend yield is 1.58% and the 2014 PE is 21.9.

Technical chart:  The stock broke past all-time highs in April 2014, most recently trading between $44-$46.  It could easily begin reaching new highs again, as early as May 28, 2014.

Past recommendations:  I recommended RHI to investors several times since early 2012.  I gave the stock a strong buy rating in August 2013, telling investors that there would be subsequent price resistance at $43/$44.

My most recent comments on Robert Half were on January 15, 2014, when the stock ran up to price resistance at $43.  At that time, I told investors that the stock “will most likely trade in the lower $40′s for a while now.”  The stock then traded sideways until April 23, when it made another move upwards, surpassing the all-time highs from 2006.

Current Recommendation:  RHI shares are not buy-rated at Goodfellow LLC because the earnings growth rate is much lower than the price-earnings ratio (PE), indicating that the stock is overvalued.

The chart remains decidedly bullish.  All shareholders should hold their shares, because the stock price is likely to continue rising immediately.  Use stop-loss orders to protect capital gains.

Goodfellow LLC Rating:  Hold, Growth, Growth & Income, Volatile.  (05/27/14)

RHI Chart

RHI data by YCharts

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Happy investing!

Crista Huff


Goodfellow LLC

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