Robert Half Earnings: Despite Conservative Guidance, We Modestly Raise Our Fair Value Estimate

Narrow-moat Robert Half reported first-quarter results slightly below the midpoints but still within management's previous guidance ranges for both revenue and earnings per share. We modestly increase our fair value estimate to $97 from $95, driven mainly by the time value of money. Management released second-quarter 2023 revenue and EPS guidance of $1.695 billion and $1.14 at each respective midpoint. Second-quarter guidance represents a significant drop from last year's second-quarter earnings of $1.60; revenue also is expected to decrease by 9% on an adjusted basis. While we acknowledge near-term macro related headwinds, we still think Robert Half is well positioned in the highly cyclical and competitive recruiting industry over the long term. The stock remains undervalued, in our view.