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Kelly Services (KELYA)
NASDAQ:KELYA
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Kelly Services (KELYA) AI Stock Analysis

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KELYA

Kelly Services

(NASDAQ:KELYA)

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Neutral 51 (OpenAI - 4o)
Rating:51Neutral
Price Target:
$14.50
▲(10.35% Upside)
Kelly Services' overall score reflects strong revenue growth but significant challenges in profitability and valuation. The stable balance sheet and improving cash flow are positive, yet the lack of technical indicators and negative P/E ratio weigh on the score. The earnings call and corporate events suggest potential for future improvement.
Positive Factors
Revenue Growth
Strong revenue growth indicates expanding market presence and effective service offerings, suggesting resilience in core business operations.
CEO Transition
New leadership with a focus on profitable growth and value creation can drive strategic evolution and enhance long-term competitiveness.
Cash Flow Improvement
Improving cash flow enhances financial flexibility, allowing for strategic investments and debt reduction, supporting long-term stability.
Negative Factors
Profitability Challenges
Negative profitability metrics highlight operational inefficiencies, which may hinder long-term financial health and shareholder returns.
Demand Reduction
Reduced demand from key clients can impact revenue stability and growth prospects, necessitating strategic adjustments to mitigate risks.
Earnings Decline
Declining earnings per share reflect challenges in maintaining profitability, which could affect investor confidence and long-term growth potential.

Kelly Services (KELYA) vs. SPDR S&P 500 ETF (SPY)

Kelly Services Business Overview & Revenue Model

Company DescriptionKelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries. The company operates through five segments: Professional & Industrial; Science, Engineering & Technology; Education; Outsourcing & Consulting; and International. The Professional & Industrial segment delivers staffing, outcome-based, and direct-hire services in the areas of office, professional, light industrial, and contact center specialties. The Science, Engineering & Technology segment offers staffing, outcome-based, and direct-hire services in the areas of science and clinical research, engineering, information technology, and telecommunications specialties. The Education segment provides staffing and executive search services to early childhood, and higher education markets. The Outsourcing & Consulting segment offers recruitment process outsourcing (RPO), payroll process outsourcing, and talent advisory services, as well as managed services. The International segment provides staffing, RPO, and direct-hire services in Europe and Mexico. The company serves customers in the United States, Canada, Mexico, Puerto Rico, France, Switzerland, Portugal, Russia, the United Kingdom, Italy, Germany, Ireland, rest of Europe, and the Asia-Pacific region. Kelly Services, Inc. was founded in 1946 and is headquartered in Troy, Michigan.
How the Company Makes MoneyKelly Services generates revenue primarily through the placement of temporary and permanent staff in client organizations. The company charges fees based on a markup of the employee's hourly wage or a percentage of the employee's annual salary for permanent placements. Key revenue streams include the staffing services for various sectors, managed service provider (MSP) solutions, and recruitment process outsourcing (RPO). Additionally, Kelly Services has established strategic partnerships with various organizations to enhance its service offerings and expand its market reach, contributing to its overall earnings. The company also benefits from a diverse client base, reducing dependency on any single sector or customer.

Kelly Services Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with strong performance and growth in the Education and SET segments, as well as effective liquidity and cost management. However, these were balanced by declines in the ETM segment, macroeconomic challenges, and significant demand reductions from large customers. The sentiment is neutral, as the highlights and lowlights are balanced.
Q2-2025 Updates
Positive Updates
Education Segment Growth
The Education business grew 5.6% year-over-year, driven by ongoing fill rate improvement and stable demand in the K-12 space.
SET Segment Expansion
SET revenue increased by 19% on a reported basis due to the acquisition of MRP, with organic revenue down only 3.2% when excluding lower demand for federal contractors.
Strong Liquidity Position
Kelly Services ended the quarter with total available liquidity of $301 million, including $18 million in cash and $283 million of available liquidity on credit facilities.
Operational Discipline and Cost Management
SG&A expenses declined by 1% year-over-year on an adjusted organic basis, reflecting the company's focus on improving productivity and aligning resources with demand.
Positive Outlook for Education and Outcome-Based Offerings
Education expected to show stronger growth in the second half of the year, and outcome-based offerings demonstrate resilience with 2% year-over-year growth driven by ETM.
Negative Updates
Decline in ETM Segment Revenue
ETM revenue declined 3.9% year-over-year on a reported basis, with a 5.1% decline on an organic basis due to reduced demand from large customers and federal contractors.
Impact of Macroeconomic Environment
Revenue was negatively impacted by 1.3% from reduced demand for federal contractors and 3.5% from large customers' cost-reduction initiatives.
Adjusted EBITDA Margin Decline
Adjusted EBITDA margin declined 40 basis points to 3.4%, reflecting incremental revenue pressure and increased net interest expenses due to debt from the MRP acquisition.
Challenges with Large Customers
Significant reductions in demand from three large customers, impacting revenue in the ETM segment, with one major contact center relationship ending in Q3.
Company Guidance
During the second quarter of fiscal year 2025, Kelly Services reported revenue growth driven by its strategic focus on more resilient markets, with its Education business achieving a 5.6% year-over-year increase and its SET segment showing a 19% rise on a reported basis due to the MRP acquisition. However, on an organic basis, the company experienced a 3.3% revenue decline, impacted by reduced demand for federal contractors and significant demand reductions from a few large customers. Adjusted EBITDA stood at $37 million, reflecting a 9% decrease from the prior year, and the adjusted EBITDA margin declined by 40 basis points to 3.4%. Despite these challenges, Kelly Services maintained liquidity of $301 million and executed a $130 million net paydown on its debt. The company anticipates a 5% to 7% revenue decline in the third quarter, mainly due to continued pressures from large customers and federal contractor reductions, but expects adjusted EBITDA margin expansion of 80 to 90 basis points year-over-year.

Kelly Services Financial Statement Overview

Summary
Kelly Services shows strong revenue growth but struggles with profitability and operational efficiency. The balance sheet is stable with low leverage, but negative returns on equity are concerning. Cash flow is improving, yet not translating into consistent profitability.
Income Statement
45
Neutral
Kelly Services shows a mixed performance in its income statement. The company has experienced a significant revenue growth rate of 99.5% in the TTM period, indicating strong top-line growth. However, profitability metrics such as the net profit margin and EBIT margin are negative, reflecting ongoing challenges in achieving operational efficiency. The gross profit margin remains stable, but the negative net income suggests that cost management needs improvement.
Balance Sheet
60
Neutral
The balance sheet of Kelly Services is relatively stable, with a low debt-to-equity ratio of 0.106 in the TTM period, indicating conservative leverage. However, the return on equity is negative, which is a concern for shareholders. The equity ratio remains healthy, suggesting a solid capital structure, but the company needs to improve its profitability to enhance shareholder returns.
Cash Flow
55
Neutral
The cash flow statement shows a positive trend in free cash flow growth, with a significant increase of 58.3% in the TTM period. The operating cash flow to net income ratio is positive, indicating that the company is generating cash from its operations despite negative net income. However, the free cash flow to net income ratio suggests that cash generation is not yet translating into profitability.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue4.50B4.33B4.84B4.97B4.91B4.52B
Gross Profit902.40M882.60M961.40M1.01B919.20M827.60M
EBITDA37.20M39.90M78.20M-13.40M241.10M-59.10M
Net Income-6.20M-600.00K36.40M-63.30M156.10M-72.80M
Balance Sheet
Total Assets2.51B2.63B2.58B2.66B2.89B2.56B
Cash, Cash Equivalents and Short-Term Investments18.00M39.00M125.80M153.70M112.70M223.00M
Total Debt133.90M302.60M51.30M70.40M78.90M87.40M
Total Liabilities1.25B1.40B1.33B1.41B1.56B1.36B
Stockholders Equity1.27B1.23B1.25B1.25B1.34B1.20B
Cash Flow
Free Cash Flow105.10M15.80M61.40M-88.30M73.80M170.50M
Operating Cash Flow114.00M26.90M76.70M-76.30M85.00M186.00M
Investing Cash Flow16.20M-361.60M-14.10M167.50M-180.70M9.80M
Financing Cash Flow-159.50M214.80M-59.60M-50.60M-8.10M-8.10M

Kelly Services Technical Analysis

Technical Analysis Sentiment
Negative
Last Price13.14
Price Trends
50DMA
13.52
Negative
100DMA
12.70
Positive
200DMA
12.86
Positive
Market Momentum
MACD
-0.08
Positive
RSI
38.72
Neutral
STOCH
12.35
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 13.14 is below the 20-day moving average (MA) of 13.72, below the 50-day MA of 13.52, and above the 200-day MA of 12.86, indicating a neutral trend. The MACD of -0.08 indicates Positive momentum. The RSI at 38.72 is Neutral, neither overbought nor oversold. The STOCH value of 12.35 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
1.03B31.206.95%1.22%8.89%-13.57%
62
Neutral
138.04M56.753.69%2.42%-9.76%-53.41%
53
Neutral
90.97M109.673.89%5.16%
51
Neutral
$460.82M11.43-0.49%2.33%0.97%-112.75%
49
Neutral
190.47M-5.48-11.09%-13.01%68.18%
47
Neutral
399.88M-12.3854.20%-16.20%-222.75%
63
Neutral
$10.79B15.437.44%2.01%2.89%-14.66%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
KELYA
Kelly Services
13.14
-7.52
-36.40%
BBSI
Barrett Business Services
44.00
7.73
21.31%
KFRC
Kforce
29.83
-29.54
-49.76%
MAN
ManpowerGroup
37.78
-32.52
-46.26%
TBI
Trueblue
6.25
-1.37
-17.98%
ZIP
ZipRecruiter
4.61
-4.68
-50.38%

Kelly Services Corporate Events

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Kelly Services Appoints New Chief Accounting Officer
Neutral
Aug 7, 2025

On August 7, 2025, Kelly Services announced the appointment of Nicholas A. Zuhlke as Vice President, Controller, and Chief Accounting Officer, effective August 11, 2025, succeeding Laura Lockhart. Zuhlke brings extensive experience from his previous roles at DexKo Global Holdings Inc. and other companies. In its second-quarter earnings report, Kelly Services reported a 4.2% year-over-year revenue increase to $1.1 billion, primarily due to acquisitions, despite a 3.3% organic decline. The company experienced a decrease in operating earnings and adjusted EBITDA compared to the previous year, with expectations of a revenue decline in Q3 due to reduced demand from U.S. federal contractors. Kelly remains focused on growth in resilient markets and aligning resources with demand, aiming for future margin improvements.

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 ChangesBusiness Operations and Strategy
Kelly Services Appoints Christopher Layden as New CEO
Positive
Aug 7, 2025

On August 7, 2025, Kelly Services announced the appointment of Christopher Layden as the new President and CEO, effective September 2, 2025, succeeding Peter Quigley, who will retire but remain as a strategic advisor and board member until May 2026. Layden, previously COO at Prolink, brings extensive experience in workforce solutions and is expected to drive Kelly’s strategic evolution, focusing on profitable growth and value creation, building on the progress made under Quigley’s leadership.

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.

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.

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.Date of analysis: Aug 14, 2025