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Robert Half (RHI) Q1 Earnings: Will It Beat Estimates?

Robert Half International, Inc.RHI is set to report first-quarter 2016 results after the market closes on Apr 28. Last quarter, this global staffing firm posted positive earnings surprise of 1.43%.

In fact, Robert Half has delivered positive earnings surprises in three of the last four quarters and in-line earnings in one, making for an average positive surprise of 1.18%.

Let’s see how things are shaping up prior to this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Robert Half is likely to beat earnings because it has the right combination of two key components.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.56%. This is a meaningful and leading indicator of a likely earnings surprise.

Zacks Rank: Robert Half has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a significantly higher chance of beating earnings. Meanwhile, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions. 

The combination of Robert Half’s Zacks Rank #3 and +1.56% ESP makes us confident of an earnings beat.

What's Driving the Better-than-Expected Earnings?

Strong revenue growth boosted by broad-based and increasing demand for the company’s professional staffing services, particularly in the U.S. have proved to be Robert Half’s strength for the past four years. Also, the company’s earnings have grown in double digits for 23 consecutive quarters on a year-over-year basis, driven by growing demand for skilled workforce and consulting services.

In the first quarter, Robert Half expects revenues in the range of $1.270–$1.330 billion, representing an increase of 5%-10% from $1.21 billion on a reported basis. The company expects earnings in the range of 61 – 67 cents per share, which implies a growth rate of 5.2%-15.5% from the year-ago earnings of 58 cents per share.

Robert Half’s subsidiary Protiviti is one of the key drivers of revenues and operating performance. It helps companies solve problems in finance, technology, operations, governance, risk and internal audit. The company expects the momentum to continue in the soon-to-be reported quarter with an improving economy. The company’s international operations have also improved over time, particularly driven by higher demand for staffing and consulting services.

However, fluctuations in currency values have an adverse impact on the profitability of the company, as Robert Half derives a considerable portion of its revenues from foreign countries.

Other Stocks to Consider

Here are some other consumer staple companies that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Kellogg Co. K, with an Earnings ESP of +1.08% and a Zacks Rank #2.

The Procter & Gamble Co. PG, with an Earnings ESP of +1.24% and a Zacks Rank #3.

Avon Products, Inc. AVP, with an Earnings ESP of +50.00% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
AVON PRODS INC (AVP): Free Stock Analysis Report
 
KELLOGG CO (K): Free Stock Analysis Report
 
PROCTER & GAMBL (PG): Free Stock Analysis Report
 
ROBT HALF INTL (RHI): Free Stock Analysis Report
 
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