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Robert Half International

10/25/2016

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As temporary staffing becomes a larger portion of the workforce in an ever evolving economy, companies like Robert Half become more and more critical to the successful functioning of companies. For many workers it fits better into the work styles of a new generation with new values surrounding work, family and personal life. For others, it's the beginning of a lifelong career.
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​Robert Half International Inc.
provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. The company operates through three segments: Temporary and Consultant Staffing, Permanent Placement Staffing, and Risk Consulting and Internal Audit Services. It places temporary personnel for accounting, finance, and bookkeeping; temporary and full-time office and administrative personnel consisting of executive and administrative assistants, receptionists, and customer service representatives; full-time accounting, financial, tax, and accounting operations personnel; and information technology contract consultants and full-time employees in the areas of platform systems integration and end-user support, including specialists in Web development, networking, application development, systems integration, database design, security and business continuity, and desktop support. The company also offers temporary and full-time employees in attorney, paralegal, legal administrative, and legal secretarial positions; senior level project professionals in the accounting and finance fields for financial systems conversions, expansion into new markets, business process reengineering, business systems performance enhancement, and post-merger financial consolidation. In addition, it is involved in serving professionals in the areas of interactive media, design, marketing, advertising, and public relations; and placing project consultants in various positions, such as creative directors, graphics designers, Web content developers, Web designers, media buyers, brand managers, and public relations specialists. Further, the company provides business and technology risk consulting, and internal audit services. It markets its staffing services to clients, as well as to employment candidates. The company was founded in 1948 and is headquartered in Menlo Park, California.
(Summary) (Company) (Chart)
23 October 2016
Price $38.88
1yr Target $40.12
Analysts 14
Dividend $0.88
Payout Ratio 31.54%

1yr Cap Gain 3.18%
Yield 2.26%
1yr Tot Return 5.44%

P/E 13.93
PEG 1.85
Beta 1.04


EPS (ttm) $2.79
EPS next yr $2.97
Forward P/E 13.10
EPS next 5yr 7.54%
1yr Price Support $22.39

Market Cap $4.99 Bil
Revenues $5.26 Bil
Earnings $365.20 Mil
Profit Margin 6.93%

Quick Ratio 2.10
Current Ratio 2,10
Debt/Equity 0.00


1yr RevGR 8.49%
3yr RevGR 7.33%
5yr RevGR 9.91%

1yr EarnGR 19.02%
3yr EarnGR 30.52%
5yr EarnGR 43.63%

1yr DivGR 11.11%
3yr DivGR 9.95%
5yr DivGR 8.99%

ROA 21.00%
ROE 35.40%


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​Operations


Robert Half International Inc. provides specialized staffing and risk consulting services through Accountemps, Robert Half Finance & Accounting, OfficeTeam, Robert Half Technology, Robert Half Management Resources, Robert Half Legal, The Creative Group, and Protiviti. The Company, through its Accountemps, Robert Half Finance & Accounting, and Robert Half Management Resources divisions, is the world’s largest specialized provider of temporary, full-time, and project professionals in the fields of accounting and finance. OfficeTeam specializes in highly skilled temporary administrative support personnel. Robert Half Technology provides information technology professionals. Robert Half Legal provides temporary, project, and full-time staffing of attorneys and specialized support personnel within law firms and corporate legal departments. The Creative Group provides project staffing in the interactive media, design, and marketing fields. Protiviti, which began operations in 2002, is a global business consulting and internal audit firm. Protiviti, which primarily employs professionals specializing in risk, advisory and transactional services, is a wholly owned subsidiary of the Company.

The Company’s business was originally founded in 1948. Prior to 1986, the Company was primarily a franchisor, under the names Accountemps and Robert Half (now called Robert Half Finance & Accounting), of offices providing temporary and full-time professionals in the fields of accounting and finance. Beginning in 1986, the Company and its current management embarked on a strategy of acquiring franchised locations. All of the franchises have been acquired. The Company believes that direct ownership of offices allows it to better monitor and protect the image of its tradenames, promotes a more consistent and higher level of quality and service throughout its network of offices and improves profitability by centralizing many of its administrative functions.

Since 1986, the Company has significantly expanded operations at many of the acquired locations, opened many new locations and acquired other local or regional providers of specialized temporary service personnel. The Company has also expanded the scope of its services by launching the new product lines
OfficeTeam, Robert Half Technology, Robert Half Management Resources, Robert Half Legal and The Creative Group.


In 2002, the Company hired more than 700 professionals who had been affiliated with the internal audit and business and technology risk consulting practice of Arthur Andersen LLP, including more than 50 individuals who had been partners of that firm. These professionals formed the base of the Company’s Protiviti Inc. subsidiary. Protiviti® has enabled the Company to enter the market for business consulting and internal audit services, which the Company believes offers synergies with its traditional lines of business. 


Marketing and Recruiting

The Company markets its staffing services to clients as well as employment candidates. Local marketing and recruiting are generally conducted by each office or related group of offices. Local advertising directed to clients and employment candidates consists of radio, digital, search engine marketing, social media, websites, job boards, and trade shows. Direct marketing through e-mail and telephone solicitation also constitutes a significant portion of the Company’s total advertising.

National advertising conducted by the Company consists primarily of radio, streaming audio, digital display, search engine marketing, social media amplification, and advertisements in national digital and print news publications, websites, social media sites, and trade publications. Additionally, the Company has expanded its use of job boards and aggregators in all aspects of sales and recruitment. Joint marketing arrangements have been entered into with major software manufacturers and typically provide for development of proprietary skills tests, cooperative advertising, joint e-mail campaigns, and similar promotional activities.

The Company also actively seeks endorsements and affiliations with professional organizations in the business management, technology, office administration, and professional secretarial fields. In addition, the Company conducts public relations activities designed to enhance public recognition of the Company and its services. This includes outreach to journalists, bloggers and social media influencers, and the distribution of thought leadership via print, video, corporate- maintained social media sites and other online properties.  


Organization
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Management of the Company’s staffing operations is coordinated from its headquarters facilities in Menlo Park and San Ramon, California. The Company’s headquarters provides support and centralized services to its offices in the administrative, marketing, public relations, accounting, training and legal areas, particularly as it relates to the standardization of the operating procedures of its offices. As of December 31, 2015, the Company conducted its staffing services operations through 332 offices in 42 states, the District of Columbia and 17 foreign countries. Office managers are responsible for most activities of their offices, including sales, local advertising and marketing and recruitment. 

The Way Forward For Me

Robert Half International has benefitted from being in the right place with the right product as the economy has significantly changed over the years. They also have a lot of attributes that a dividend growth investor admires. But this industry is not in 100% control of its own destiny because it's so dependent on the health of the economy. Notice in the charts on the right that revenues and net income fell during the recession in 2009-2010 but bounced back as the economy bounced back. Unfortunately that can be expected to occur again if, and when, the economy has difficulties in the future. 

Notice also that despite the economic difficulties, the company continued to increase their dividend throughout the entire period (although obviously the payout ratio had to increase during that period). This is a great sign that the company had confidence in, and believed in, the continued success of the business. That's good management.

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Looking at a long term stock price it also becomes obvious that as the company came out of the recession and as earnings grew rapidly, investors pushed the stock higher faster than it should have been and expanding the P/E ratio beyond a level that was sustainable. The last year or so the stock has fallen to the point where the P/E ratio is below 14 and the PEG is below 2 which is much more reasonable than it's been in awhile. 

I think it may be time to start picking up shares of this company in expectation that the economy will continue to expand. I'd like to own shares in this company at prices in the low 30s but looking at the chart, the stock may be basing near $35 per share. That may be the best that one could expect on a company with these fundamentals, so initially that's where I'll put my buy points. Anywhere below that I'll simply increase my buying activity. I really believe that this company will continue to increase its dividend at a rate greater than inflation and in the low double digits. That rate will obviously increase my purchasing power in the future as income increases faster than the cost of living.

One last observation. Reviewing a company like Robert Half is a perfect example of buying dividend growth companies at the appropriate price. Buying shares in this company in early 2015 when the P/E ratio and PEG were at all time highs would have bought you a great company consistently raising its dividend, but an investor would have lost almost 40% of his money. Even with growing dividends it would have taken a decade to recover that type of loss of wealth. I'm a dividend growth investor but I'm also a smart investor. I believe that no matter what an investor's overall strategy is, he needs to understand the concept of total return on investment.
 
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    I am an Individual Investor with specific interest in long term growth and then enhancing my returns with income from dividends and derivatives. I don't recommend stocks to anyone (it's a good way to lose friends) and no one reading this should misinterpret my blog as a recommendation for any type of investment. I am writing this solely for myself and my kids.


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