Robert Half Earnings: We Plan to Slightly Decrease Fair Value Estimate; Stock Remains Undervalued

We expect to decrease narrow-moat-rated Robert Half’s $94 fair value estimate by 2% to 4%. Hiring demand continues to soften given the uncertain macroeconomic landscape. Robert Half’s third-quarter consolidated revenue of $1.56 billion decreased nearly 15% year on year but lies within management’s previous guidance. Diluted earnings per share of $0.90 also met expectations, in fact, results were at the upper end of the management's prior guidance. We see management meeting the upper end of guidance as a positive sign. In our view, it demonstrates the firm is weathering the current climate. Management released fourth-quarter EPS and revenue guidance of $0.82 and $1.47 billion at their respective midpoints, signaling that customer hiring activities will still stagnate. Nonetheless, we think the stock remains undervalued, and we maintain our long-term thesis on Robert Half’s strong competitive positioning.