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Kelly Services (KELYA)
NASDAQ:KELYA
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Kelly Services
(NASDAQ:KELYA)
Rating:54Neutral
Price Target:
$12.00
▼(-2.28%Downside)
Positive Factors
Market Position
Kelly continued to gain market share and outperform the broader industry.
Revenue Performance
Kelly reported solid Q1/25 revenue of $1.165 billion that exceeded the consensus of $1.158 billion.
Segment Growth
Professional & Industrial segment revenue grew 4.4% year-over-year, reflecting continued traction of the segment’s omni-channel strategy.
Negative Factors
Earnings
Q1/25 adjusted EPS of $0.39 declined from $0.56 in the year-ago quarter due primarily to a $0.15 per share increase in net interest expense.
Government Demand
Reduced demand from the federal government due to spending cutbacks was an 80 basis point headwind to organic revenue growth in Q1/25.
IT Staffing Demand
Demand for IT staffing remained challenged, consistent with industry trends, as clients continued to take a cautious approach to initiating large technology deployments.
Kelly Services (KELYA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$429.53M
Dividend Yield2.49%
Average Volume (3M)261.76K
Price to Earnings (P/E)11.4
Beta (1Y)0.61
Revenue Growth-3.49%
EPS Growth-140.04%
CountryUS
Employees5,570
SectorIndustrials
Sector Strength90
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)0.39
Shares Outstanding31,907,118
10 Day Avg. Volume286,316
30 Day Avg. Volume261,759
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.34
Price to Sales (P/S)0.00
P/FCF Ratio6.38
Enterprise Value/Market Cap1.54
Enterprise Value/Revenue0.04
Enterprise Value/Gross Profit0.75
Enterprise Value/Ebitda2.62
Forecast
1Y Price Target
$26.00Price Target Upside111.73% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Kelly Services Business Overview & Revenue Model
Company DescriptionKelly Services, Inc. (KELYA) is a global leader in workforce solutions, offering a comprehensive range of outsourcing and consulting services as well as staffing on a temporary, temporary-to-hire, and direct-hire basis. The company operates across multiple sectors, including education, engineering, science, IT, and office functions, providing specialized talent solutions to meet the evolving needs of businesses worldwide. With a strong focus on innovation and customer-centric approaches, Kelly Services is dedicated to connecting skilled professionals with leading organizations to enhance workforce efficiency and productivity.
How the Company Makes MoneyKelly Services generates revenue primarily through the provision of staffing and workforce solutions. The company earns money by placing temporary, temporary-to-hire, and permanent employees across various industries, charging clients for these placements. Revenue streams include fees from temporary staffing services, where Kelly charges clients a markup on the wages paid to temporary workers, and fees from direct-hire placements, where clients pay a percentage of the hired employee's first-year salary. Additionally, Kelly Services offers outsourcing and consulting services, providing human resource management and project-based services, which contribute to its revenue. Partnerships with companies and organizations seeking flexible workforce solutions also play a significant role in enhancing the company's earnings, as do its investments in technology and innovation to streamline operations and improve client and candidate experiences.
Kelly Services Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: 8.48%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted some positive developments, such as revenue growth, improved gross profit rate, and strong performance in the education segment. However, significant challenges included reduced demand for federal contractors, high integration costs, and a decline in earnings per share and EBITDA margin. The sentiment of the call is mixed with equal focus on growth and challenges.Q1-2025 Updates
Positive Updates
Revenue Growth
Revenue for the first quarter of 2025 totaled $1.16 billion, an increase of 11.5% versus Q1 last year. On an organic basis, year-over-year revenue was up 0.2%.
Education Segment Performance
The education segment was up 6.6% year-over-year, with ongoing fill rate improvement and higher bill rates.
Improved Gross Profit Rate
Gross profit was $236.5 million, with a gross profit rate of 20.3%, an improvement of 60 basis points compared to the prior year quarter.
Integration and Efficiency Initiatives
Integration of Motion Recruitment Partners and unification of OCG and P&I business units expected to drive efficiencies and synergies.
Semiconductor and Renewable Sectors
Strong demand for higher margin outcome-based solutions within semiconductor and renewable sectors.
Negative Updates
Federal Contractor Demand Decline
A 0.8% negative impact on overall revenue due to reduced demand for federal contractors, notably impacting the SET and ETM segments.
High Integration Costs
Integration charges of $10.7 million in the quarter, with ongoing charges expected due to IT and severance expenses.
Earnings Per Share Reduction
Reported earnings per share were $0.16 compared to $0.70 in Q1 2024. On an adjusted basis, earnings per share were $0.39 compared to $0.56 in the prior year.
Adjusted EBITDA Margin Decline
Adjusted EBITDA margin declined 20 basis points to 3%.
Company Guidance
In the first quarter of the fiscal year 2025, Kelly Services achieved an 11.5% increase in total revenue, reaching $1.16 billion, driven by solid performances in its Education and Science, Engineering, and Technology (SET) segments, alongside the integration of Motion Recruitment Partners (MRP). On an organic basis, revenue grew by 0.2%, despite a 0.8% negative impact from reduced demand for federal contractors. The company's gross profit stood at $236.5 million, with a gross profit rate of 20.3%, reflecting a 60-basis-point improvement over the prior year. Adjusted EBITDA increased by 5% to $34.9 million, although the adjusted EBITDA margin slightly declined by 20 basis points to 3%. Kelly Services anticipates second-quarter revenue growth of 6% to 7%, despite a 1% to 1.5% negative impact from the federal contractor demand reduction. The company expects adjusted EBITDA margin expansion in the latter half of the year, building on their efforts to streamline operations and integrate its acquisitions.Kelly Services Financial Statement Overview
Summary
Kelly Services faces financial challenges with declining revenue, negative profitability, and moderate leverage. While cash flow generation remains strong, the company needs to address profitability issues and stabilize its revenue trajectory to improve its financial position.Income Statement
Kelly Services shows a challenging income statement with a declining revenue trend and negative net income for the TTM (Trailing-Twelve-Months). The gross profit margin stands at 19.73%, indicating moderate profitability, but the net profit margin is negative at -0.46%, reflecting operational difficulties. The company also reports negative EBIT and EBITDA margins, suggesting issues with core profitability and operating efficiency.45
Neutral
Balance Sheet
The balance sheet reveals moderate financial health, with a debt-to-equity ratio of 0.21, indicating a conservative leverage position. The return on equity is negative due to net losses, but the equity ratio of 47.82% suggests a stable capital structure with adequate equity financing. Despite these strengths, the decline in stockholders' equity and total assets warrants attention.55
Neutral
Cash Flow
Cash flow analysis shows resilience with positive operating cash flow and free cash flow in the TTM (Trailing-Twelve-Months). The free cash flow to net income ratio is negative due to net losses, but the operating cash flow to net income ratio is favorable at 3.70, highlighting effective cash generation relative to earnings. However, significant fluctuations in investing and financing cash flows may pose risks.60
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.45B | 4.33B | 4.84B | 4.97B | 4.91B | 4.52B | Gross Profit |
| 878.60M | 882.60M | 961.40M | 1.01B | 919.20M | 827.60M | EBIT |
| -16.80M | -15.10M | 24.30M | 142.20M | 48.60M | 137.60M | EBITDA |
| 24.60M | 39.90M | 78.20M | -13.40M | 241.10M | -59.10M | Net Income Common Stockholders |
| -20.60M | -600.00K | 36.40M | -63.30M | 156.10M | -72.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 223.00M | 39.00M | 125.80M | 153.70M | 112.70M | 223.00M | Total Assets |
| 2.56B | 2.63B | 2.58B | 2.66B | 2.89B | 2.56B | Total Debt |
| 87.40M | 302.60M | 51.30M | 70.40M | 78.90M | 87.40M | Net Debt |
| -135.60M | 263.60M | -74.50M | -83.30M | -33.80M | -135.60M | Total Liabilities |
| 1.36B | 1.40B | 1.33B | 1.41B | 1.56B | 1.36B | Stockholders Equity |
| 1.20B | 1.23B | 1.25B | 1.25B | 1.34B | 1.20B |
| Cash Flow | Free Cash Flow | ||||
| 66.40M | 15.80M | 61.40M | -88.30M | 73.80M | 170.50M | Operating Cash Flow |
| 76.30M | 26.90M | 76.70M | -76.30M | 85.00M | 186.00M | Investing Cash Flow |
| -430.50M | -361.60M | -14.10M | 167.50M | -180.70M | 9.80M | Financing Cash Flow |
| 180.00M | 214.80M | -59.60M | -50.60M | -8.10M | -8.10M |
Kelly Services Technical Analysis
Positive
12.28
Price Trends
11.82
Positive
12.66
Negative
15.04
Negative
Market Momentum
<0.01
Negative
58.45
Neutral
79.42
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KELYA, the sentiment is Positive. The current price of 12.28 is above the 20-day moving average (MA) of 11.97, above the 50-day MA of 11.82, and below the 200-day MA of 15.04, indicating a neutral trend. The MACD of <0.01 indicates Negative momentum. The RSI at 58.45 is Neutral, neither overbought nor oversold. The STOCH value of 79.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 2 New Risks
1.
We are subject to substantial pressure to meet external stakeholder's sustainability and ESG requirements. Q4, 2024
2.
Events such as natural disasters, severe weather, terrorist attacks, war, pandemics, and other catastrophic events could decrease demand for our services in impacted areas. Q4, 2024
Kelly Services Peers Comparison
Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | $4.49B | 12.34 | 5.40% | 248.65% | 4.13% | -12.33% | |
64 Neutral | $909.79M | 129.31 | 1.71% | 1.35% | 6.17% | -85.16% | |
63 Neutral | $140.56M | 41.22 | 5.67% | 2.37% | -7.66% | -34.08% | |
61 Neutral | $78.23M | 38.07 | 2.52% | ― | 3.93% | ― | |
54 Neutral | $429.53M | 11.43 | -1.60% | 2.49% | -3.49% | -140.04% | |
54 Neutral | $184.26M | ― | -36.98% | ― | -16.76% | -1127.93% | |
49 Neutral | $563.92M | 225.24 | -2897.28% | ― | -20.95% | -152.29% |
* Industrials Sector Average
Performance Comparison
KELYA
Kelly Services
12.28
-8.68
-41.41%
HSII
Heidrick & Struggles
44.31
10.81
32.27%
MHH
Mastech Holdings
6.65
-1.21
-15.39%
TBI
Trueblue
6.52
-4.11
-38.66%
HQI
HireQuest
10.02
-2.45
-19.65%
ZIP
ZipRecruiter
6.07
-3.60
-37.23%
Kelly Services Corporate Events
Business Operations and StrategyFinancial Disclosures
Kelly Services Unveils Strategic Initiatives and Growth Plan
Positive
May 22, 2025
On May 22, 2025, Kelly Services posted an investor presentation on its website, outlining its strategic initiatives and financial performance. The company has streamlined its operations to focus on higher-margin, higher-growth markets, resulting in a significant expansion of its EBITDA margin. Kelly Services has also realigned its business segments to enhance efficiency and effectiveness, aiming to capture shareholder value through its specialty growth strategy. The company has achieved structural savings and monetized non-core assets, positioning itself for long-term value creation for stakeholders.
The most recent analyst rating on (KELYA) stock is a Hold with a $29.00 price target. To see the full list of analyst forecasts on Kelly Services stock, see the KELYA Stock Forecast page.
Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy
Kelly Services Approves 2025 Equity Incentive Plan
Positive
May 9, 2025
On May 8, 2025, Kelly Services, Inc. held its annual stockholders meeting virtually, where the 2025 Equity Incentive Plan was approved. The meeting also saw the election of board members, approval of executive compensation, and ratification of PricewaterhouseCoopers LLP as the independent auditor for 2025, indicating strong shareholder support for the company’s strategic initiatives.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.