Korn Ferry (KFY) and Robert Half (RHI) are both huge, publicly traded recruiting firms and both are involved in matching job seekers with roles in the federal government. While the two companies’ revenue fell in their last reported quarters amid macroeconomic challenges, they still generated impressive profits. Prior to this year and the rapid changes in the federal government, both hoped for better times ahead. Because the two stocks have significant dividend yields, investors who buy either or both names will essentially be paid to wait for them to rebound.
Korn Ferry’s Government Recruiting Business
The company provides consultants to federal agencies and says that it fills both General Schedule and Senior Executive Service positions. And because Korn Ferry has a GSA Schedule, there’s no set limit to the number of roles that it can fill. The firm also reported that it has built close contacts in every part of the government, enabling it to attract the best applicants for open positions.
Also noteworthy is that Korn Ferry provides consultants that can fill defense and security positions, while also helping agencies exploit technology. Finally, the company can assist agencies with “executive search and succession planning.
Robert Half’s Government Recruiting Business
As for Robert Half, the firm reports that it provides “federal, state and local government agency clients” with contractors. Among the types of positions that it can fill in the government are “IT, accounting & finance, administrative, legal and creative” roles. Its Proviti subsidiary, which specializes in consultants, can provide agencies with consultants that specialize in the following areas: technology, business process improvement, risk and compliance, analytics, internal audit.
Declining Revenue, Still-Robust Profits, and Hope for a Better Future
Both firms’ revenue dropped in their last reported quarter versus the same period a year earlier. In Korn Ferry’s fiscal second quarter of 2025 which ended in October 2024, the firm’s revenue fell to $674.4 million from $704 million during the same period a year earlier. However, its adjusted diluted earnings per share in Q2 of FY25 was $1.21, well above the 97 cents that it delivered in Q2 of FY24.
One of the challenges faced by the company was significantly lower demand for professional interim services relative to the same period a year earlier. This trend could continue with the current federal hiring environment. Additionally, the fees paid by the firm’s new professional search and interim assignments also dropped meaningfully year-over-year. However, the company noted that it was seeing “early signs of improvement” in its revenue trends, as all of its main business sales were either stable or higher compared with the previous quarter.
- KFY has a 1.8% dividend yield, while its price-earnings ratio is a rather low 15 times. The average P/E ratio for the Staffing and Employment Services sector is 25 times.
- In calendar Q3, Robert Half’s revenue dropped 6% compared with the same quarter a year earlier to $1.47 billion. Its net income declined to $65.45 million from $95.55 million in Q3 of 2023.
The company noted that “client budgets remain constrained and decision cycles extended.” But it added that business confidence was improving, aided by central banks’ interest rate cuts. It noted that its financial results had been “stable” sequentially for the 12 to 14 weeks heading into its earnings on October 22. Robert Half indicated that it expected the economy to improve further going forward. Robert Half’s dividend yield is a hefty 3% and it has a somewhat elevated forward price-to-earnings ratio of 26 times, perhaps partly due to its high yield.
