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Kforce Inc (KFRC)
NYSE:KFRC
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Kforce
(NYSE:KFRC)
Select Model
Select Model
Rating:54Neutral
Price Target:
$29.00
▲(8.25% Upside)
Action:DowngradedDate:02/21/26
KFRC scores as a middle-of-the-road setup: financial performance is pressured by multi-year revenue decline and margin compression, and technical signals are bearish with price below all key moving averages. Offsetting factors include supportive valuation (moderate P/E and high dividend yield) and an earnings-call backdrop suggesting potential stabilization via sequential momentum and cost savings, though near-term margin and macro risks remain.
Positive Factors
Consistent Cash Generation
Kforce has produced positive operating and free cash flow each year, which is durable support for dividends, buybacks and reinvestment. Even with 2025 declines, FCF covered a large portion of net income, providing financial flexibility to fund strategic initiatives and shareholder returns.
Management Cost Actions
The $7M annualized savings from organizational refinements are structural, not one-off seasonal tweaks. Sustained cost discipline can raise operating leverage, improving margins even if revenue stays flat, and enhances resilience through the cycle by lowering the revenue level needed to reach targeted operating margins.
Shift to Higher‑Value Consulting
Growing demand in data/digital and consulting increases higher‑margin mix, supports stable bill rates and creates longer-term client engagements. This structural shift toward specialized services improves margin sustainability and revenue quality compared with commoditized staffing.
Negative Factors
Multi‑Year Revenue Decline
Three consecutive years of declining revenue and compressed net margins indicate a structural top-line challenge. Persistent revenue erosion reduces scale, weakens gross profit leverage and makes SG&A deleverage harder, limiting the company's ability to restore historic profitability absent sustained demand recovery.
Weakened Balance‑Sheet Flexibility
Rising leverage and declining shareholder equity erode financial optionality. If earnings remain pressured, the company has less cushion for investment, acquisitions or incremental buybacks, and higher leverage raises risk during downturns, making capital allocation trade-offs more constrained over the medium term.
Structural Margin Headwinds
Recurring cost pressures—payroll‑tax resets and rising healthcare expenses—directly compress flexible gross margins and disproportionately impact lower‑spread F&A work. Combined with weak direct‑hire conversions, these factors create durable margin headwinds that management must offset via mix shift or sustained cost cuts.
Kforce (KFRC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$474.13M
Dividend Yield5.12%
Average Volume (3M)236.35K
Price to Earnings (P/E)13.2
Beta (1Y)0.65
Revenue Growth-5.91%
EPS Growth-23.01%
CountryUS
Employees1,700
SectorIndustrials
Sector Strength72
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)0.43
Shares Outstanding18,278,000
10 Day Avg. Volume245,536
30 Day Avg. Volume236,349
Financial Highlights & Ratios
PEG Ratio-0.63
Price to Book (P/B)4.41
Price to Sales (P/S)0.41
P/FCF Ratio11.74
Enterprise Value/Market Cap1.14
Enterprise Value/Revenue0.41
Enterprise Value/Gross Profit1.50
Enterprise Value/Ebitda10.01
Forecast
1Y Price Target
$39.50Price Target Upside47.44% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)2.27
Revenue Forecast (FY)$1.32B
Kforce Business Overview & Revenue Model
Company DescriptionKforce Inc. provides professional staffing services and solutions in the United States. It operates through two segments, Technology, and Finance and Accounting (FA). The Technology segment provides talent solutions to its clients primarily in the areas of information technology, such as systems/applications architecture and development, data management and analytics, business and artificial intelligence, machine learning, project and program management, and network architecture and security. This segment serves clients in various industries comprising financial and business services, communications, insurance, retail, and technology industries. The FA businesses segment offers talent solutions to its clients in areas, including financial planning and analysis, business intelligence analysis, accounting, transactional accounting, business and cost analysis, and taxation and treasury. It also provides consultants in lower skilled areas comprising loan servicing and support, customer and call center support, data entry, and other administrative roles. This segment serves clients in various industries, including financial and business services, healthcare, and manufacturing sectors. Kforce Inc. was founded in 1962 and is headquartered in Tampa, Florida.
How the Company Makes MoneyKforce generates revenue primarily through its staffing services, which include temporary staffing, direct-hire placements, and contract services. The company earns money by charging clients a fee based on the hourly rates or salaries of the professionals it places. The Technology segment, which focuses on IT staffing, typically has higher margins than the Finance & Accounting segment. Additionally, Kforce benefits from long-term relationships with clients, which can lead to repeat business and contracted projects. Significant partnerships and collaborations with various firms enhance their ability to source talent and meet client demands effectively, contributing to consistent revenue generation.
Kforce Key Performance Indicators (KPIs)
Any
Gross Profit by Segment
Shows the profit left after direct costs for each segment, highlighting differences in margins and cost structure across Kforce’s services. Useful for assessing which businesses are the most profitable, where margin expansion or pressure may come from, and how segment trends will affect overall earnings and cash flow.
Shows the profit left after direct costs for each segment, highlighting differences in margins and cost structure across Kforce’s services. Useful for assessing which businesses are the most profitable, where margin expansion or pressure may come from, and how segment trends will affect overall earnings and cash flow.
Data provided by:
The Fly
The FlyKforce Earnings Call Summary
Earnings Call Date:Feb 02, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 04, 2026
Earnings Call Sentiment Neutral
The call conveyed a cautiously optimistic tone: management highlighted a meaningful sequential recovery (Q4 revenue beat, strong billing-day growth, robust consulting/data demand and a strong start to 2026) and outlined cost actions and strategic initiatives expected to drive margin and long-term growth. However, these positives are tempered by multi-year revenue declines (FY25 down ~5%), a sharp decline in adjusted EPS (~22% YoY), Q4 margin headwinds from healthcare/seasonality, and a higher effective tax rate. The narrative indicates potential inflection but continued near-term uncertainty, with management positioning the company to benefit if the topline momentum sustains.Q4-2025 Updates
Positive Updates
Q4 Revenue Beat and Sequential Momentum
Q4 total revenues of $332 million exceeded expectations and reflected a 3% sequential improvement on a billing-day basis; management reported January 2026 as the best start since 2022 and noted front-end indicators (client visits, interviews, order flow) at multi-year highs.
Strong Sequential Growth in Flex Revenue (Technology & F&A)
Flex revenues in the technology business rose sharply on a billing-day basis (management cited a 35.7% sequential increase in the prepared remarks) while F&A flex revenues grew 5.7% sequentially in Q4; these sequential gains were highlighted as the highest tech flex billing-day growth since 2022.
Consulting & Data/Digital Demand Expansion
Consulting-led offerings, especially data and digital practices, are the firm's fastest-growing areas with a robust pipeline and double-digit percentage demand growth in data/digital; management highlighted increased client investments in data modernization, digital, application engineering and cloud as drivers of future revenue.
Stable Average Bill Rates and Improving Mix
Technology average bill rate has remained steady at approximately $90/hour over the past three years despite macro pressure; growth in higher-skilled consulting mix and increased nearshore/offshore delivery are helping stabilize bill rates and support slight spread improvement year-over-year.
Cost Actions and Expected Annualized Benefit
Management undertook headcount and organizational refinements and other operating cost reductions with expected annualized run-rate benefits of approximately $7 million (roughly $0.30 per share); they expect these actions to support operating margin improvement in 2026 even absent revenue growth.
Capital Return and Dividend Increase
Returned $14.1 million of capital in the quarter ($6.7M dividends and ~$7.4M share repurchases); the board approved a dividend increase marking the seventh consecutive year of dividend hikes and management stated excess cash beyond requirements will be used for buybacks while maintaining stable debt levels.
Progress on Strategic Initiatives
Advancement of transformational initiatives such as Workday implementation (HCM and Financials), expansion of offshore delivery capabilities (Pune), and integration of firm capabilities under 'One Kforce'—all cited as contributors to long-term financial objectives and future operating efficiencies.
Profitability Metrics and Outlook
Q4 GAAP operating margin was 2.6% (adjusted 3.6%); management targets ~8% operating margin when revenues return to ~$1.7 billion and expects flexibility to generate operating leverage if revenue trends accelerate; Q1 revenue guidance range of $324M–$332M and EPS $0.37–$0.45 (63 billing days).
Negative Updates
Full-Year Revenue Decline
Fiscal 2025 revenues were approximately $1.33 billion, down roughly 5% year-over-year, marking the third consecutive year of revenue declines for Kforce and the broader technology services sector.
Adjusted EPS Contraction
Adjusted EPS for fiscal 2025 was $2.09, down approximately 22% year-over-year; Q4 GAAP EPS was $0.30 and adjusted EPS was $0.43, which fell below the midpoint of guidance due to higher healthcare costs and elevated performance-based compensation.
Margin Pressure from Healthcare Costs and Seasonality
Overall gross margin in Q4 was 27.2%, down 50 basis points sequentially (but up 20 bps YoY); tech flex margins rose 40 bps YoY yet declined 40 bps sequentially largely due to higher-than-expected healthcare costs and normal seasonal holiday effects; management flagged payroll tax resets expected to reduce flex margins in Q1 by ~60 bps (tech) and ~120 bps (F&A).
SG&A Deleverage and Higher Tax Rate
SG&A as a percentage of revenue was 24.2% GAAP (adjusted 23.2%), up ~120 basis points year-over-year driven by deleverage from lower revenue and gross profit; Q4 effective tax rate was 33.6% (higher than planned) and management expects a higher-than-normal ~29% effective tax rate in 2026 (vs. historical ~26%).
Direct Hire & Conversion Weakness
Conversion of consultants to direct hires remained muted (large-enterprise conversions down), reducing direct-hire mix which negatively impacted margins; management noted small-to-mid-market direct hire activity is improving but enterprise direct-hire demand has slowed.
One-Time Charges and Write-offs
Q4 included charges related to organizational refinements totaling $0.13 per share (approximately one-third of that related to severance) and a discontinued software asset write-off ( ~$2.2M referenced in Q&A), contributing to Q4 GAAP results being affected by nonrecurring items.
Top-Line Uncertainty and Macro Risks
Management emphasized reliance on a stable operating environment for guidance and noted ongoing macroeconomic uncertainty, a soft labor market, and open questions about the timing and scope of AI-driven demand—any adverse macro changes could reverse recent momentum.
Company Guidance
Kforce guided Q1 2026 revenues of $324–$332 million and EPS of $0.37–$0.45, with 63 billing days (one additional day year‑over‑year) and an expected effective tax rate of ~29% (2026 could approximate 29% as well); management said the recent organizational refinements should deliver roughly $7 million of annualized savings (≈$0.30 per share) with only a partial benefit reflected in Q1. For context, FY2025 revenues were ≈$1.33 billion (down ~5% YoY), Q4 revenue was $332 million (≈3% sequential improvement per billing day), Q4 GAAP EPS was $0.30 (adjusted $0.43) and FY2025 GAAP EPS was $1.96 (adjusted $2.09, down ~22% YoY); Q4 gross margin was 27.2% (down 50 bps sequential, up 20 bps YoY), Q4 operating margin was 2.6% GAAP (3.6% adjusted), tech average bill rate remains ~$90/hr (F&A ≈$53/hr), and tech flex margins were +40 bps YoY but -40 bps sequential. They expect Q1 payroll‑tax reset pressure to reduce flex margins by ~60 bps in Technology and ~120 bps in F&A, expect spreads to be relatively stable with Q4, aim to improve operating margins in 2026 even with flat revenue (and target ~8% operating margin when annual revenues reach ~$1.7B), and noted $14.1M of capital returned in the quarter (dividends $6.7M, repurchases $7.4M), operating cash flow of $19.7M and ROE of ≈30%.Kforce Financial Statement Overview
Summary
Financials reflect a cyclical downturn: revenue declined each year from 2022–2025 with margin compression (net margin down to ~2.6% in 2025). Positives include continued profitability, consistent positive operating/free cash flow, and generally manageable leverage (debt-to-equity ~0.56), though cash conversion weakened in 2025 and equity has declined.Income Statement
KFRC shows a clear downcycle: revenue has fallen each year from 2022–2025 (2025 down ~6% vs. 2024), and profitability has compressed alongside it (net margin down from ~4.4% in 2022 to ~2.6% in 2025; operating profitability similarly lower). Gross margin has been relatively steady but drifting down from 2022 levels, suggesting limited cushion while demand softens. The key strength is that the company remains profitable through the slowdown, but the trajectory of sales and margins is negative.46
Neutral
Balance Sheet
Leverage looks manageable overall, with debt-to-equity around ~0.56 in 2025 (higher than 2022–2024 but still not extreme), and total debt remains modest relative to the business size. Equity has declined from 2022–2025, which reduces balance-sheet flexibility, and the uptick in leverage bears watching if the earnings downturn persists. Returns on equity remain high (still ~28% in 2025), though that has eased from peak levels as profitability weakened.58
Neutral
Cash Flow
Cash generation remains solid, with positive operating cash flow and free cash flow in every year shown; however, both operating cash flow and free cash flow declined in 2025 (free cash flow down ~11% year over year). Cash conversion weakened: operating cash flow is meaningfully below net income in 2025 (coverage ~0.54), indicating less earnings-to-cash support versus prior years. A positive is that free cash flow still covers a large portion of net income (~0.76 in 2025), even though that ratio has slipped from stronger levels in 2022–2024.55
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.33B | 1.41B | 1.53B | 1.71B | 1.58B |
| Gross Profit | 355.82M | 385.44M | 427.07M | 501.11M | 456.86M |
| EBITDA | 52.49M | 75.64M | 92.13M | 126.97M | 109.47M |
| Net Income | 34.83M | 50.41M | 61.08M | 75.43M | 75.18M |
Balance Sheet | |||||
| Total Assets | 365.64M | 357.83M | 357.98M | 392.00M | 503.40M |
| Cash, Cash Equivalents and Short-Term Investments | 2.14M | 349.00K | 119.00K | 121.00K | 96.99M |
| Total Debt | 69.74M | 47.60M | 57.46M | 46.56M | 118.26M |
| Total Liabilities | 241.03M | 203.22M | 198.90M | 209.81M | 315.00M |
| Stockholders Equity | 124.60M | 154.62M | 159.08M | 182.20M | 188.41M |
Cash Flow | |||||
| Free Cash Flow | 46.80M | 79.30M | 83.70M | 82.70M | 66.46M |
| Operating Cash Flow | 61.65M | 86.87M | 91.47M | 90.81M | 72.90M |
| Investing Cash Flow | -14.14M | -7.56M | -4.86M | -14.28M | 8.30M |
| Financing Cash Flow | -45.71M | -79.08M | -86.61M | -173.39M | -87.70M |
Kforce Technical Analysis
Negative
26.79
Price Trends
32.17
Negative
30.39
Negative
33.36
Negative
Market Momentum
-1.85
Positive
28.52
Positive
6.19
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KFRC, the sentiment is Negative. The current price of 26.79 is below the 20-day moving average (MA) of 31.56, below the 50-day MA of 32.17, and below the 200-day MA of 33.36, indicating a bearish trend. The MACD of -1.85 indicates Positive momentum. The RSI at 28.52 is Positive, neither overbought nor oversold. The STOCH value of 6.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KFRC.
Kforce Risk Analysis
Kforce disclosed 27 risk factors in its most recent earnings report. Kforce 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
Kforce Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
56 Neutral | $343.51M | ― | -23.06% | 3.53% | 0.46% | -477.90% | |
54 Neutral | $474.13M | 13.24 | 27.19% | 5.12% | -5.91% | -23.01% | |
51 Neutral | $1.20B | ― | -0.64% | 4.96% | -2.44% | -156.01% | |
47 Neutral | $214.76M | -5.46 | ― | ― | -10.14% | -1381.34% | |
44 Neutral | $103.42M | -2.37 | -8.91% | ― | -5.37% | 75.32% |
* Industrials Sector Average
KFRC
Kforce
26.79
-21.10
-44.06%
KELYA
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9.64
-3.40
-26.05%
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27.90
-25.60
-47.85%
TBI
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3.95
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-36.19%
ZIP
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1.92
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Kforce Corporate Events
Stock Buyback
Kforce Initiates Stock Repurchase Plan in December 2025
Neutral
Dec 16, 2025
On December 12, 2025, Kforce Inc. initiated a corporate stock trading plan to repurchase its outstanding common stock, in line with a program authorized by its Board of Directors. This plan, compliant with Rule 10b5-1 of the Securities Exchange Act of 1934, will allow the company to buy back shares between December 16, 2025, and February 4, 2026, through an independent broker, adhering to specific price, market, volume, and timing constraints.
The most recent analyst rating on (KFRC) stock is a Hold with a $33.00 price target. To see the full list of analyst forecasts on Kforce stock, see the KFRC 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.