Opinions
Barry Schwartz
Korn/Ferry International
KFY-N
PAST TOP PICK
Mar 01, 2017
$31.380
Stock price when the opinion was issued
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BUY
What happens when times go bad, when companies do less hiring? Maybe they do less executives hiring. Maybe KFY's acquisition of Hay Group reduces their cyclicality and makes them resist the next recession better. It's a v very good company in a space with few investable companies.
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PAST TOP PICK
(A Top Pick Jan 09/18, Down 1%) Known as an executive search firm, but now most of the revenues come from consulting. Earnings were up 20% this year. Market cared about fear, not earnings. Expect 10% or more in earnings growth this year. Still positive on US growth, and Korn/Ferry will benefit.
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TOP PICK
Stockchase Research Editor: Michael O'Reilly This employment recruitment company is well positioned for the return to work of higher ended laborers. Recently reported earnings posted an all time high in revenue, that was up over 25% on the year. EPS of $1.21 beat expectations of $0.36. They approved a 20% increase in the dividend, which is backed by a payout ratio under 20% of cash flow. We would buy this with a stop loss at $52, looking to achieve $84 -- upside over 15%. Yield 0.66% (Analysts’ price target is $84.00)
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TOP PICK
Stockchase Research Editor: Michael O'Reilly We reiterate our recommendation of KFY as a TOP PICK. The executive search firm trades at 18x earnings, compared to peers at 25x. Currently it is valued at under 3x book value. It pays a small dividend, backed by a payout ratio under 20% of cash flow. It continue to build cash reserves, while paying down debt and buying back stock. We would buy this with a stop loss at $55, looking to achieve $89 -- upside potential over 20%. Yield 0.66% (Analysts’ price target is $88.75)
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TOP PICK
Stockchase Research Editor: Michael O'Reilly We again reiterate KFY, the world's largest executive search firm (with experts in over 50 countries) as a TOP PICK. It recently reported record quarterly income that was up over 170% over the year along with record earnings. The company has adopted online AI technology to better help companies develop HR strategies. The EPS growth creates a PEG ratio of 1.03. It pays a small dividend, backed by a payout ratio under 10% of cash flow. We like that it continues to build cash reserves, while paying down debt and buying back stock. We recommend trailing up the stop (from $55) to $65, looking to achieve $102 -- upside potential over 30%. Yield 0.62% (Analysts’ price target is $102.25)
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PAST TOP PICK
(A Top Pick Jan 06/22, Down 15.6%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with KFY has triggered its stop at $65. To remain disciplined, we recommend covering the position at this time. This results in a net investment loss of 12%, when combined with the previous buy recommendation.
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WATCH
They report Wednesday. This executive recruiter has been delivering good numbers, but nobody cares. However, pay attention to see if executive jobs are also turning over. The Fed won't stop tightening until we see weakness across the board, including in the C suite. If not, then Jerome Powell has a long way to go.
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(A Top Pick March 28/16. Up 13%.) This is into executive recruiting and they made an acquisition to try and diversify to doing pension and salary consulting. Very cheap valuation, and he would add to holdings here.