NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.5%. Since the same quarter one year prior, revenues slightly increased by 5.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although KELYA's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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.
- 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, KELLY SERVICES INC increased its bottom line by earning $1.72 versus $0.70 in the prior year. For the next year, the market is expecting a contraction of 19.8% in earnings ($1.38 versus $1.72).
Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries worldwide. The company has a P/E ratio of nine, below the average diversified services industry P/E ratio of 12 and below the S&P 500 P/E ratio of 17.7. Kelly Services has a market cap of $578.9 million and is part of the
industry. Shares are up 13.6% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet RatingsStaff