Rating Change #4
Kelly Services (KELYA) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and robust revenue growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.
Highlights from the ratings report include:
- KELLY SERVICES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, KELLY SERVICES INC turned its bottom line around by earning $0.70 versus -$3.01 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $0.70).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Professional Services industry. The net income increased by 382.1% when compared to the same quarter one year prior, rising from $3.90 million to $18.80 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Professional Services industry and the overall market on the basis of return on equity, KELLY SERVICES INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for KELLY SERVICES INC is rather low; currently it is at 16.60%. Regardless of KELYA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.30% trails the industry average.
- Net operating cash flow has decreased to -$1.80 million or 28.57% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries worldwide. The company has a P/E ratio of 9.2, below the average diversified services industry P/E ratio of 9.5 and below the S&P 500 P/E ratio of 17.7. Kelly Services has a market cap of $374.7 million and is part of the services sector and diversified services industry. Shares are down 40.3% year to date as of the close of trading on Friday.You can view the full Kelly Services Ratings Report or get investment ideas from our investment research center.
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