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While service activities are in good shape at the moment, their positive impacts on the Staffing Firms industry are being partially offset by contracting economic activities in the manufacturing sector. Successful remote work and increased use of technology are helping Heidrick & Struggles International, Inc., TrueBlue, Inc. and RCM Technologies, Inc..
About the Industry
The Zacks Staffing industry is a diverse sector encompassing companies that offer a comprehensive range of human resources and workforce solutions. These services cover various aspects of personnel management, including employment screening, recruitment services for both temporary and long-term job placements, retirement planning, human capital management, payroll administration, performance evaluation, organizational planning, and financial management.
Additionally, some firms within this industry provide specialized services, such as staffing and risk consulting, professional staffing, and global business solutions tailored to the needs of small to medium-sized enterprises. They also offer organizational consulting services with a global reach, catering to a wide and varied client base, which includes domestic and international businesses.
What's Shaping the Future of the Business Services Industry?
Demand Stability:The industry is mature, with demand for services in good shape for a while now. Revenues, income and cash flows are anticipated to gradually reach the pre-pandemic levels, helping most industry players to pay out stable dividends.
Increased Adoption of Remote Work & Hybrid Models: The swift increase in remote work since the pandemic has led staffing agencies to prioritize flexible staffing solutions, including remote and hybrid models. These adaptations align with the desires of both clients and job seekers for improved work-life balance. With the continued prevalence of remote work, staffing agencies are expected to prioritize and meet evolving workplace preferences effectively.
Technology Use Gaining Traction in Staffing:The staffing sector is progressively using technology to optimize operations, improve efficiency and deliver superior services. The rising adoption of AI-driven tools and platforms is making the process of attracting, assessing and onboarding IT talents more efficient.
The adoption of social media and Big Data is increasing as well. Video-conferencing platforms, such as Zoom and Microsoft Teams, facilitate remote communication, and cloud and blockchain technologies bolster HR data security. This ensures a continued demand for staffing services.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Zacks Staffing Firms industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #194. This rank places it in the bottom 22% of 248 Zacks industries.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates a continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperforms the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry's recent stock market performance and current valuation.
Industry's Price Performance
The Zacks Staffing Firms industry has underperformed the broader sector and the S&P 500 over the past year.
The industry has declined 7.7% against the S&P 500 composite's growth of 24.8% and the broader sector's rise of 15.9%.
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing staffing stocks because of their high debt levels, the industry is currently trading at 7.53X compared with the S&P 500's 14.79X and the sector's 27.82X.
Over the past five years, the industry has traded as high as 13.27X and as low as 3.63X, with the median being 6.92X.
3 Staffing Stocks to Keep a Close Eye On
We have presented three stocks that are poised to grow in the near term.
TrueBlue: This specialized workforce solutions provider is currently riding on its flexible and short-duration offerings for clients who are hesitant to make long-term workforce commitments and tapping into opportunities in high-growth and attractive markets.
Increased synergies within the staffing business through better leverage of technology assets across brands and leadership with the on-site business combined with cost discipline are helping improve the profitability for the company's PeopleManagement segment.
TBI currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its 2024 bottom line has increased more than 100% in the past 30 days. TBI shares have gained 5.1% in the past month. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
RCM Technologies: This business and technology solutions provider's top line is benefiting from the increasing demand for its services in life sciences, HCM and Puerto Rico solutions.
The company is continuing its expansion efforts to grow its nationwide client base and leveraging its leadership position in K-12 staffing to grab opportunities and strengthen its competitive advantage.
RCMT currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its 2024 bottom line has increased 7.5% in the past 30 days. RCMT shares have gained 2.9% in the past month.
Heidrick & Struggles International: This United States-based executive search, consulting and on-demand talent services provider's revenues are being driven by acquisitions of Aterus and B4Z, and growth of the legacy Hedrick Consulting business, driven by leadership and culture purpose practices.
HSII currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2024 EPS has increased 3.3% in the past 30 days. HSII shares have gained 18.4% in the past month.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights Heidrick & Struggles International, TrueBlue and RCM Technologies
For Immediate Release
Chicago, IL – June 7, 2024 – Today, Zacks Equity Research discusses Heidrick & Struggles International, Inc. (HSII - Free Report) , TrueBlue, Inc. (TBI - Free Report) and RCM Technologies, Inc. (RCMT - Free Report) .
Industry: Staffing
Link: https://www.zacks.com/commentary/2284708/here-are-3-staffing-stocks-to-consider-amid-industry-woes
While service activities are in good shape at the moment, their positive impacts on the Staffing Firms industry are being partially offset by contracting economic activities in the manufacturing sector. Successful remote work and increased use of technology are helping Heidrick & Struggles International, Inc., TrueBlue, Inc. and RCM Technologies, Inc..
About the Industry
The Zacks Staffing industry is a diverse sector encompassing companies that offer a comprehensive range of human resources and workforce solutions. These services cover various aspects of personnel management, including employment screening, recruitment services for both temporary and long-term job placements, retirement planning, human capital management, payroll administration, performance evaluation, organizational planning, and financial management.
Additionally, some firms within this industry provide specialized services, such as staffing and risk consulting, professional staffing, and global business solutions tailored to the needs of small to medium-sized enterprises. They also offer organizational consulting services with a global reach, catering to a wide and varied client base, which includes domestic and international businesses.
What's Shaping the Future of the Business Services Industry?
Demand Stability:The industry is mature, with demand for services in good shape for a while now. Revenues, income and cash flows are anticipated to gradually reach the pre-pandemic levels, helping most industry players to pay out stable dividends.
Increased Adoption of Remote Work & Hybrid Models: The swift increase in remote work since the pandemic has led staffing agencies to prioritize flexible staffing solutions, including remote and hybrid models. These adaptations align with the desires of both clients and job seekers for improved work-life balance. With the continued prevalence of remote work, staffing agencies are expected to prioritize and meet evolving workplace preferences effectively.
Technology Use Gaining Traction in Staffing:The staffing sector is progressively using technology to optimize operations, improve efficiency and deliver superior services. The rising adoption of AI-driven tools and platforms is making the process of attracting, assessing and onboarding IT talents more efficient.
The adoption of social media and Big Data is increasing as well. Video-conferencing platforms, such as Zoom and Microsoft Teams, facilitate remote communication, and cloud and blockchain technologies bolster HR data security. This ensures a continued demand for staffing services.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Zacks Staffing Firms industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #194. This rank places it in the bottom 22% of 248 Zacks industries.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates a continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperforms the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry's recent stock market performance and current valuation.
Industry's Price Performance
The Zacks Staffing Firms industry has underperformed the broader sector and the S&P 500 over the past year.
The industry has declined 7.7% against the S&P 500 composite's growth of 24.8% and the broader sector's rise of 15.9%.
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing staffing stocks because of their high debt levels, the industry is currently trading at 7.53X compared with the S&P 500's 14.79X and the sector's 27.82X.
Over the past five years, the industry has traded as high as 13.27X and as low as 3.63X, with the median being 6.92X.
3 Staffing Stocks to Keep a Close Eye On
We have presented three stocks that are poised to grow in the near term.
TrueBlue: This specialized workforce solutions provider is currently riding on its flexible and short-duration offerings for clients who are hesitant to make long-term workforce commitments and tapping into opportunities in high-growth and attractive markets.
Increased synergies within the staffing business through better leverage of technology assets across brands and leadership with the on-site business combined with cost discipline are helping improve the profitability for the company's PeopleManagement segment.
TBI currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its 2024 bottom line has increased more than 100% in the past 30 days. TBI shares have gained 5.1% in the past month. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
RCM Technologies: This business and technology solutions provider's top line is benefiting from the increasing demand for its services in life sciences, HCM and Puerto Rico solutions.
The company is continuing its expansion efforts to grow its nationwide client base and leveraging its leadership position in K-12 staffing to grab opportunities and strengthen its competitive advantage.
RCMT currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its 2024 bottom line has increased 7.5% in the past 30 days. RCMT shares have gained 2.9% in the past month.
Heidrick & Struggles International: This United States-based executive search, consulting and on-demand talent services provider's revenues are being driven by acquisitions of Aterus and B4Z, and growth of the legacy Hedrick Consulting business, driven by leadership and culture purpose practices.
HSII currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2024 EPS has increased 3.3% in the past 30 days. HSII shares have gained 18.4% in the past month.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.