Robert Half| A 75-Year-Old Giant, Priced Like It’s Dying

Down 70%, debt-free, and still compounding at elite returns.

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The Turnaround Investment Newsletter

Since the start of 2024, my portfolio is up 220.71%.

This year alone, I’m sitting at +73.14% YTD through July.

All earned from setups like this. Mispriced, unloved, and loaded with leverage to a theme no one’s paying attention to yet.

This week’s new idea covers Robert Half ($RHI).

The setup?

A 75 year old professional services company with incredible returns on capital, strong data correlation, an immaculate balance sheet, and strong upside.

If you don’t know the name, I’ll walk through it all:

• What they do.

• Why they are interesting today.

• The risks.

• And why I expect $80+ per share (More than 2x from today’s price of $36)

Let’s get into it.

Please note this is NOT a company I own. This is an idea I thought worth sharing.

What Does Robert Half Do?

Robert Half is a staffing and consulting firm that has been around for more than 75 years. Today they break their business down into 3 main segments:

• Contract Talent Solutions: 56% of Revenue

  • Targets temporary staffing placement in finance and accounting, technology, marketing and creative, legal, administrative and customer support industries. With finance and accounting making up 74% of this segment.

• Permanent Placement: 8% of Revenue

  • Focused on placing full-time accountants, tax professionals, and other finance and operations staff.

• Protiviti (Business Consulting): 35% of Revenue

  • Offers consulting services like internal audit, financial advisory, technology consulting, risk/compliance, business process improvement, etc.

Their strategy in staffing solutions is to go up the ladder to high skilled positions.

These are high impact decisions for both the employee and company making the hire. Which means second they can charge more to provide that service. And these positions are less economically sensitive, after all regardless of what is happening you need someone handling payroll.

Most of their business does come from the US but they do operate in 32 countries globally.

Why They Are Interesting

Significant Stock Decline

Robert Half is down over 70% from 2022 highs.

High Returns on Capital

Historical averages since 2000 of 39% ROIC and 40% ROCE place the business among the most efficient capital allocators in the market.

(Blue) ROCE, (Light Blue) ROIC

Strong Data Correlation

Revenues troughs historically lag changes in Temporary Help by 2 to 3 quarters.

Strong Balance Sheet

0 debt and $380M in cash gives the company a rock solid balance sheet not at risk anytime soon of cutting their dividend.

Returning Cash to Shareholders

A 6.4% dividend plus about 2.5% in annual buybacks adds up to a 9% yield while you wait for the turnaround in revenues and FCF.

Large Data Bank

Decades of placement data give Robert Half a natural edge in building AI driven matching tools. Faster and more precise placements reduce costs and support higher margins as clients are willing to pay for speed.

Risks and Questions

Recession

As you may have guessed a recession would cause a slowdown in hiring demand which is the core driver of Robert Half’s business. To put it in context though demand for temporary staffing has been falling for almost 3 years now. So in effect the company is coming out of their industry specific recession.

Management Incentives and Capability

Work needs done to understand the incentive structure laid out for management and time spent understanding their track record.

As with any turnaround and with one in a competitive industry like this you need to know they are aligned with you as a shareholder and have the record to prove they can keep the company in the strong position they have gained.

AI Impact

I laid out one side of AI that I believe will positively impact the company but work needs to be done to not only understand the capex layout RHI plans but how it will affect demand.

I suspect it will be a positive driver but there may be angles I haven’t considered.

Competition

Robert Half operates in a highly competitive and fragmented industry. From the small amount of work I have done it does seem RHI has created relationships and reputation that give them am advantage. But doing more work to understand what that is, how durable that is, and if it could be replicated is crucial.

If Robert Half cannot defend its market share or grow they would be in for a long painful decline. Though generally they seem to be a highly recognized and awarded company.

Valuation

Please note this is NOT a company I own. This is an idea I thought worth sharing.

To value Robert Half I am going to make some assumptions mostly based on historical averages and some taking a more conservative approach.

For their revenue after the 2008 recession we say their revenue grow at about 9% per year. I am going to assume from the current TTM figure of $5.57B they shrink another 3% into year end followed by 3 years of 6% growth to the end of 2028.

Assumed 2028 Revenue: $6.43B

On this revenue their 10 year historical average FCF margin of 8% is very reasonable.

Assumed 2028 FCF: $514M

This is still well below their peak 2022 FCF of $683M and 10% margins.

Next on share count I am going to assume they buyback 2.5% of shares each year.

Assumed 2028 Share Count: 92.27M

Lastly I am going to assign a below the 10 year average 17x multiple. They operate in a highly competitive industry but RHI has phenomenal returns on capital though they invest very little back into the business. With that multiple we arrive at forecasted market cap and share price.

2028 Market Cap: $8.74B

2028 Share Price: $94.70

Compared to todays stock price of about $36 you are looking at 163% upside or 33% CAGR over the next 3.4 years.

For a company with the track record and returns on capital Robert Half does this is a very intriguing idea.

What do you think of the company?

Disclaimer:

This content is provided for informational and entertainment purposes only and should not be construed as professional financial or investment advice. The opinions expressed herein are solely those of the author, based on personal research and analysis, and do not reflect the views or advice of any financial institutions or licensed professionals. I do not have access to your personal financial situation, goals, risk tolerance, or investment preferences, and therefore cannot provide personalized investment recommendations. It is essential that you conduct your own research, carefully consider all relevant factors, and consult with a licensed financial advisor or other professional before making any investment decisions. Investing inherently involves risk, including the potential loss of principal, and past performance is not indicative of future results. I am not responsible for any decisions, actions, or outcomes resulting from the use of this content. Always ensure that your investments align with your personal financial situation and long‑term objectives.