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Kelly Services (KELYA)
NASDAQ:KELYA
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Kelly Services
(NASDAQ:KELYA)56Neutral
Positive Factors
Market Performance
Kelly continued to gain market share and outperform the broader industry.
Negative Factors
Demand Challenges
Demand for IT staffing remained challenged, consistent with industry trends, as clients continued to take a cautious approach to initiating large technology deployments.
Revenue Decline
Q3/24 revenue was down -7.1% YOY to $1.038 billion, with the decline driven by the sale of the company’s lower-margin European staffing operations at the beginning of 2024.
Kelly Services (KELYA) vs. S&P 500 (SPY)
Market Cap
$470.21M
Dividend Yield2.33%
Average Volume (3M)335.14K
Price to Earnings (P/E)11.4
Beta (1Y)0.72
Revenue Growth-10.42%
EPS Growth-101.51%
CountryUS
Employees5,570
SectorIndustrials
Sector Strength66
IndustryCorporate Services
Share Statistics
EPS (TTM)-0.02
Shares Outstanding31,592,205
10 Day Avg. Volume355,353
30 Day Avg. Volume335,139
Financial Highlights & Ratios
PEG Ratio0.14
Price to Book (P/B)N/A
Price to Sales (P/S)0.10
Price to Cash Flow (P/CF)7.50
P/FCF Ratio4.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$27.00Price Target Upside108.66% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Kelly Services Business Overview & Revenue Model
Company DescriptionKelly Services (KELYA) is a global leader in workforce solutions, specializing in connecting skilled individuals with organizations in need of talent across various industries. With operations spanning multiple sectors such as education, engineering, information technology, and science, Kelly Services offers a comprehensive suite of staffing services including temporary staffing, direct-hire, and workforce management solutions. The company's commitment to innovation and client-specific solutions positions it as a trusted partner for businesses seeking flexible and effective workforce strategies.
How the Company Makes MoneyKelly Services makes money primarily through its staffing services, which include temporary staffing, permanent placement, and outsourcing. The company generates revenue by charging client companies for the staffing solutions it provides, typically based on a markup over the wages paid to temporary employees or a fee for successful permanent placements. Key revenue streams include fees from temporary staffing assignments, where Kelly Services earns a percentage of the employee's hourly rate, and direct-hire placements, where the company receives a one-time fee. Additionally, Kelly Services may engage in managed service provider (MSP) programs and recruitment process outsourcing (RPO), offering strategic workforce planning and management services. Partnerships with various organizations and businesses, as well as its ability to adapt to market trends and demands, significantly contribute to its earnings.
Kelly Services Financial Statement Overview
Summary
Kelly Services faces significant financial challenges, with declining revenue, profitability, and cash flow. Increased leverage and negative income raise concerns about financial stability. The balance sheet's stable equity position provides some assurance, but negative trends in income and cash flow highlight the need for strategic financial improvements.Income Statement
The income statement shows a declining trend in revenue and profitability over recent years. Gross profit margin is absent for the latest period, indicating potential issues in revenue generation or cost management. EBIT and EBITDA margins are negative, pointing to operational challenges. The net profit margin has also turned negative, reflecting operating losses. These factors collectively suggest declining financial performance and profitability.45
Neutral
Balance Sheet
The balance sheet indicates a moderately leveraged position with a debt-to-equity ratio that has increased due to rising debt. The equity ratio is stable, suggesting a balanced asset structure. However, return on equity has suffered due to negative net income. The stability in stockholders' equity provides some assurance, but the increased leverage and negative profitability pose risks.55
Neutral
Cash Flow
Cash flow analysis reveals a decrease in operating cash flow and free cash flow over time, indicating potential liquidity issues. The operating cash flow to net income ratio is positive, but the free cash flow to net income ratio is negative due to negative profits. Although financing activities have provided some cash inflow, the cash flow situation reflects potential liquidity and cash management challenges.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 882.60M | 4.84B | 4.97B | 4.91B | 4.52B | Gross Profit |
| 882.60M | 961.40M | 1.01B | 919.20M | 827.60M | EBIT |
| -15.10M | 24.30M | 142.20M | 48.60M | 137.60M | EBITDA |
| 39.90M | 78.20M | -13.40M | 241.10M | -59.10M | Net Income Common Stockholders |
| -600.00K | 36.40M | -63.30M | 156.10M | -72.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 39.00M | 125.80M | 153.70M | 112.70M | 223.00M | Total Assets |
| 2.63B | 2.58B | 2.66B | 2.89B | 2.56B | Total Debt |
| 302.60M | 51.30M | 70.40M | 78.90M | 87.40M | Net Debt |
| 263.60M | -74.50M | -83.30M | -33.80M | -135.60M | Total Liabilities |
| 1.40B | 1.33B | 1.41B | 1.56B | 1.36B | Stockholders Equity |
| 1.23B | 1.25B | 1.25B | 1.34B | 1.20B |
| Cash Flow | Free Cash Flow | |||
| 15.80M | 61.40M | -88.30M | 73.80M | 170.50M | Operating Cash Flow |
| 26.90M | 76.70M | -76.30M | 85.00M | 186.00M | Investing Cash Flow |
| -361.60M | -14.10M | 167.50M | -180.70M | 9.80M | Financing Cash Flow |
| 214.80M | -59.60M | -50.60M | -8.10M | -8.10M |
Kelly Services Technical Analysis
Negative
12.94
Price Trends
13.65
Negative
15.31
Negative
18.20
Negative
Market Momentum
-0.18
Positive
38.80
Neutral
16.22
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KELYA, the sentiment is Negative. The current price of 12.94 is below the 20-day moving average (MA) of 13.50, below the 50-day MA of 13.65, and below the 200-day MA of 18.20, indicating a bearish trend. The MACD of -0.18 indicates Positive momentum. The RSI at 38.80 is Neutral, neither overbought nor oversold. The STOCH value of 16.22 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KELYA.
Kelly Services Risk Analysis
Kelly Services disclosed 32 risk factors in its most recent earnings report. Kelly Services reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kelly Services Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $3.29B | 13.62 | 13.93% | 2.26% | -3.59% | 138.97% | |
71 Outperform | $907.83M | 107.99 | 1.93% | 1.51% | 7.15% | -83.77% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
60 Neutral | $5.76B | 23.09 | 18.26% | 3.87% | -9.33% | -37.06% | |
58 Neutral | $2.69B | 19.18 | 6.83% | 5.35% | -5.61% | 77.92% | |
56 Neutral | $470.21M | 11.43 | -0.05% | 2.33% | -10.42% | -101.51% | |
44 Neutral | $186.57M | ― | -39.87% | ― | -17.78% | -820.48% |
* Industrials Sector Average
Performance Comparison
KELYA
Kelly Services
12.94
-10.55
-44.91%
HSII
Heidrick & Struggles
44.48
12.60
39.52%
KFY
Korn Ferry
64.01
1.30
2.07%
MAN
ManpowerGroup
57.35
-11.95
-17.24%
RHI
Robert Half
54.98
-20.93
-27.57%
TBI
Trueblue
5.66
-5.70
-50.18%
Kelly Services Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -2.12% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong performance in certain segments and successful strategic acquisitions, leading to significant top and bottom line growth. However, challenges such as revenue declines in specific segments and a substantial goodwill impairment charge were also noted. Overall, the positive achievements and strategic advancements appear to outweigh the setbacks.Highlights
Strong Fourth Quarter Performance
Kelly Services, Inc. delivered top and bottom line growth on a year-over-year basis, increasing organic revenue by more than 4% and adjusted EBITDA by 34% in Q4. This was accompanied by 110 basis points of margin expansion.
Education Segment Success
The Education segment achieved double-digit revenue growth, up 12% year-over-year in Q4, driven by improvements in fill rates, higher bill rates, and net new customer wins.
Strategic Acquisitions and Divestitures
Kelly Services, Inc. completed the acquisition of Children's Therapy Center and Motion Recruitment Partners, strengthening their staffing and consulting capabilities. They also sold the European Staffing business for over $100 million.
Market Share Gains Amid Industry Decline
Despite a general decline in the staffing industry, Kelly Services, Inc. captured a greater share of customer demand, outperforming the market in organic revenue growth.
Lowlights
Revenue Decline in SET
The SET segment experienced a 4% organic revenue decline, primarily due to lower staffing market demand and reduced demand in certain industry verticals such as telecom.
Goodwill Impairment Charge
Kelly Services, Inc. recognized a $72.8 million non-cash goodwill impairment charge related to the Softworld acquisition due to lower than projected financial performance amid challenging market conditions.
Overall Revenue Decrease
Total revenue for the fourth quarter of 2024 decreased by 3.3% compared to Q4 last year, although it increased by 4.4% on an organic basis.
Company Guidance
In the recent earnings call, Kelly Services, Inc. provided guidance indicating strong financial performance for the fourth quarter of 2024, with organic revenue growth of over 4% and adjusted EBITDA increasing by 34%. The company achieved a 110 basis point expansion in margin, reflecting effective organic and inorganic initiatives. The Education segment delivered double-digit revenue growth, while the SET segment capitalized on rising demand for life sciences specialties. Overall, the company's performance exceeded previous expectations, with a notable improvement in adjusted EBITDA margin to 3.7% for the quarter, accompanied by an organic margin improvement of 50 basis points. Looking ahead to 2025, Kelly Services anticipates capturing additional market share, delivering approximately 10% total revenue growth in the first half, and achieving further EBITDA margin expansion.Kelly Services Corporate Events
Executive/Board ChangesShareholder Meetings
Kelly Services Announces Retirement of Director Donald Parfet
Neutral
Feb 18, 2025
On February 12, 2025, Kelly Services announced that Donald R. Parfet intends to retire as a director at the 2025 annual shareholders meeting. Mr. Parfet has contributed significantly to the company, serving as a director since 2004, Chairman of the Board from 2018 to 2023, and Lead Director from 2012 to 2018. His retirement is not due to any disagreements with the company’s operations, policies, or practices.
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Kelly Services Announces CEO Retirement by 2025
Neutral
Feb 13, 2025
Kelly Services announced the planned retirement of its President and CEO, Peter Quigley, by the end of 2025. The company reported a fourth-quarter revenue of $1.2 billion, reflecting a 3.3% year-over-year decrease due to recent business dispositions and acquisitions. Despite a full-year revenue decline of 10.4%, Kelly delivered an adjusted EBITDA margin increase and anticipates further growth in 2025. The transition in leadership and strategic financial performance indicates a continued focus on expanding its specialty solutions and improving market positioning.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.