BUY BUY BUY BUY: Korn/Ferry International

July 16, 2017
NYSE: KFY
KORN/FERRY INTERNATIONAL
BUY HOLD SELL
BUY
RATING SINCE 12/08/2016
A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F TARGET PRICE $39.56
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 7/13/2017
$0.40 1.16% 1.40 $2.0 Billion $19.94-$36.07 $34.25
Sector: Industrials Sub-Industry: Human Resource & Employment Services Source: S&P
Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years
KFY BUSINESS DESCRIPTION
Korn/Ferry International, together with its 40
TARGET
TARGET
TARGETPRICE
PRICE
PRICE$39.56
$39.56
$39.56
subsidiaries, provides talent management solutions 38
worldwide. It operates through three segments: 36
Executive Search, Hay Group, and Futurestep.
34
STOCK PERFORMANCE (%) 32
3 Mo. 1 Yr. 3 Yr (Ann) 30
Price Change 12.18 50.94 4.85 28
26
GROWTH (%)
Last Qtr 12 Mo. 3 Yr CAGR 24
Revenues 0.58 20.41 17.66 22
Net Income 359.84 172.31 5.01 20
EPS 370.00 140.98 -0.23 Rating History
BUY HOLD BUY
RETURN ON EQUITY (%)
Volume in Millions
KFY Ind Avg S&P 500 10
Q4 2016 7.76 17.32 13.16
Q4 2015 2.95 17.10 11.83 5
Q4 2014 10.83 25.17 13.71
0
2015 2016 2017
P/E COMPARISON COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
RECOMMENDATION
We rate KORN/FERRY INTERNATIONAL (KFY) a BUY. This is driven by multiple strengths, which we believe
should have a greater impact than any weaknesses, and should give investors a better performance
opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its
solid stock price performance, impressive record of earnings per share growth, compelling growth in net
income, revenue growth and largely solid financial position with reasonable debt levels by most measures.
We feel its strengths outweigh the fact that the company shows low profit margins.
23.30 37.68 24.41
KFY Ind Avg S&P 500 HIGHLIGHTS
Powered by its strong earnings growth of 370.00% and other important driving factors, this stock has surged
by 50.94% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to
EPS ANALYSIS¹ ($) the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the
stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
KORN/FERRY INTERNATIONAL reported significant earnings per share improvement in the most recent
Q4 0.10
Q1 0.06
Q3 -0.30
quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive
Q1 0.29
Q2 0.51
Q3 0.46
Q4 0.51
Q1 0.46
Q2 0.35
Q2 0.52
Q3 0.42
Q4 0.47
earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal
year, KORN/FERRY INTERNATIONAL increased its bottom line by earning $1.47 versus $0.61 in the prior year.
This year, the market expects an improvement in earnings ($2.42 versus $1.47).
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500
2014 2015 2016 and the Professional Services industry. The net income increased by 359.8% when compared to the same
NA = not available NM = not meaningful
quarter one year prior, rising from $5.86 million to $26.92 million.
1 Compustat fiscal year convention is used for all fundamental
data items. Despite its growing revenue, the company underperformed as compared with the industry average of 4.0%.
Since the same quarter one year prior, revenues slightly increased by 0.6%. Growth in the company's revenue
appears to have helped boost the earnings per share.
KFY's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that
there has been very successful management of debt levels. To add to this, KFY has a quick ratio of 1.73, which
demonstrates the ability of the company to cover short-term liquidity needs.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: July 16, 2017 PAGE 1
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
July 16, 2017
NYSE: KFY
Sector: Industrials Human Resource & Employment Services Source: S&P
$0.40 1.16% 1.40 $2.0 Billion $19.94-$36.07 $34.25
PEER GROUP ANALYSIS INDUSTRY ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*
The professional services industry is comprised of companies engaged in widely varied activities such as
credit ratings, research, consulting, temporary employment, professional employment placement, executive
25%
recruiting, and human resource management companies. Some of the largest companies include Nielsen
KFY WAGE
FA
Holdings (NLSN), Verisk Analytics (VRSK), EquiFax (EFX), Robert Half Intl (RHI), Manpower Group (MAN), and
VO
Acacia Research (ACTG).

RA
BL
E
TNET The job market has started to resemble the online dating world where potential employers are willing to pay
ASGN
NSP an intermediary to carefully screening applicants to find ones that exactly match the skill set required to
excel at the particular job. Employers are researching the credit histories of potential employees and dating a
string of temporary employees before making a long-term employment commitment.
Revenue Growth (TTM)
Temporary employment agencies are giving the otherwise unemployed a chance to prove themselves to an
KFRC RHI
employer while limiting the risk to that employer associated with adding another full time employee. In this
UN
FA
economic recovery, the U.S. is not yet at full employment. However, the unemployment rate has fallen
VO
TBI
-10%
dramatically. In the near term this constrains the current business climate for employment agencies.
RA
KELYB
KELYA
BLE
0% 25%
PEER GROUP: Professional Services
EBITDA Margin (TTM)
Recent Market Price/ Net Sales Net Income
Companies with higher EBITDA margins and Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M)
revenue growth rates are outperforming companies
KFY KORN/FERRY INTERNATIONAL 34.25 1,951 23.30 1,621.67 84.18
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market KELYA KELLY SERVICES INC 22.93 876 7.37 5,217.40 121.80
capitalization between $515.5 Million and $6.2 KELYB KELLY SERVICES INC 22.35 876 7.19 5,217.40 121.80
Billion. Companies with NA or NM values do not RHI ROBERT HALF INTL INC 48.95 6,225 18.47 5,235.14 338.49
appear. KFRC KFORCE INC 19.25 516 14.37 1,331.50 35.03
*EBITDA – Earnings Before Interest, Taxes, Depreciation and ASGN ON ASSIGNMENT INC 54.80 2,894 28.84 2,484.90 102.19
Amortization.
JOBS 51JOB INC -ADR 47.90 2,879 30.51 344.58 91.87
REVENUE GROWTH AND EARNINGS YIELD WAGE WAGEWORKS INC 65.20 2,578 95.88 402.72 25.51
TNET TRINET GROUP INC 33.59 2,304 30.54 3,134.98 78.57
25%
NSP INSPERITY INC 71.50 1,506 22.00 3,021.60 68.93

WAGE KFY
FA
TBI TRUEBLUE INC 26.55 1,130 NM 2,672.90 -17.55

VO
RA
The peer group comparison is based on Major Human Resource & Employment Services companies of comparable size.
BL
TNET
E
ASGN NSP
JOBS
Revenue Growth (TTM)
RHI KFRC
UN
FA
VO
TBI
-10%
RA
KELYA
KELYB
BLE
-2% 14%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -5.9% and
20.4%. Companies with NA or NM values do not
appear.
July 16, 2017
NYSE: KFY
$0.40 1.16% 1.40 $2.0 Billion $19.94-$36.07 $34.25
COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Korn/Ferry International, together with its subsidiaries, Below is a summary of the major fundamental and technical factors we consider when determining our
provides talent management solutions worldwide. It overall recommendation of KFY shares. It is provided in order to give you a deeper understanding of our rating
operates through three segments: Executive Search, Hay methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
Group, and Futurestep. The company provides executive important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
recruitment services that are used to fill executive-level understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
positions, such as board directors, chief executive valuation. Please refer to our Valuation section on page 5 for further information.
officers, chief financial officers, chief operating officers,
chief information officers, chief human resource officers, FACTOR SCORE
and other senior executive officers for clients in the
consumer, financial services, industrial, life Growth out of 5 stars 4.0
sciences/healthcare provider, technology, and Measures the growth of both the company's income statement and weak strong
educational/not-for-profit industries. It also offers talent cash flow. On this factor, KFY has a growth score better than 70% of the
strategy, succession management, and leadership stocks we rate.
development, as well as rewards, motivation, and
engagement solutions to assist clients with their ongoing
assessment, compensation, and leadership development
Total Return out of 5 stars 4.0
efforts. In addition, the company provides various talent Measures the historical price movement of the stock. The stock weak strong
acquisition solutions, including recruitment process performance of this company has beaten 70% of the companies we
outsourcing, project recruitment, professional search, cover.
talent consulting and employer branding, and individual
professional search and consulting services. It serves Efficiency out of 5 stars 4.0
public and private companies, and middle market and Measures the strength and historic growth of a company's return on weak strong
emerging growth companies, as well as government and invested capital. The company has generated more income per dollar of
non-profit organizations. Korn/Ferry International was capital than 70% of the companies we review.
founded in 1969 and is based in Los Angeles, California.
Price volatility out of 5 stars 2.0
1900 Avenue of the Stars, Suite 2600 Measures the volatility of the company's stock price historically. The weak strong
Los Angeles, CA 90067 stock is less volatile than 30% of the stocks we monitor.
USA
Phone: 310-552-1834 Solvency out of 5 stars 4.0
http://www.kornferry.com Measures the solvency of the company based on several ratios. The weak strong
Employees: 7000 company is more solvent than 70% of the companies we analyze.
Income out of 5 stars 3.5

Measures dividend yield and payouts to shareholders. The company's weak strong
dividend is higher than 60% of the companies we track.
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
July 16, 2017
NYSE: KFY
$0.40 1.16% 1.40 $2.0 Billion $19.94-$36.07 $34.25
Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

IBES consensus estimates are provided by Thomson Financial KORN/FERRY INTERNATIONAL's gross profit margin for the fourth quarter of its fiscal year 2016 has increased
when compared to the same period a year ago. The company has grown its sales and net income during the
past quarter when compared with the same quarter a year ago, and although its growth in net income has
outpaced the industry average, its revenue growth has not. KORN/FERRY INTERNATIONAL has strong
liquidity. Currently, the Quick Ratio is 1.73 which shows the ability to cover short-term cash needs. The
company's liquidity has increased from the same period last year, indicating improving cash flow.
At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by
0.52 2.42 E 2.69 E 3.64% from the same quarter last year. The key liquidity measurements indicate that the company is unlikely
Q1 FY17 2018(E) 2019(E) to face financial difficulties in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
INCOME STATEMENT next 12-months. To learn more visit www.TheStreetRatings.com.
Q4 FY16 Q4 FY15
Net Sales ($mil) 419.59 417.16
EBITDA ($mil) 52.01 43.88
EBIT ($mil) 39.72 32.59
Net Income ($mil) 26.92 5.86
BALANCE SHEET
Q4 FY16 Q4 FY15
Cash & Equiv. ($mil) 415.25 284.59
Total Assets ($mil) 2,062.90 1,898.60
Total Debt ($mil) 255.98 140.00
Equity ($mil) 1,083.44 1,045.30
PROFITABILITY
Q4 FY16 Q4 FY15
Gross Profit Margin 26.68% 23.67%
EBITDA Margin 12.39% 10.51%
Operating Margin 9.47% 7.81%
Sales Turnover 0.79 0.71
Return on Assets 4.08% 1.62%
Return on Equity 7.76% 2.95%
DEBT
Q4 FY16 Q4 FY15
Current Ratio 1.84 1.39
Debt/Capital 0.19 0.12
Interest Expense 2.05 NA
Interest Coverage 19.36 NA
SHARE DATA
Q4 FY16 Q4 FY15
Shares outstanding (mil) 57 57
Div / share 0.10 0.10
EPS 0.47 0.10
Book value / share 19.03 18.25
Institutional Own % NA NA
Avg Daily Volume 330,107 404,421
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
July 16, 2017
NYSE: KFY
$0.40 1.16% 1.40 $2.0 Billion $19.94-$36.07 $34.25
RATINGS HISTORY VALUATION

Our rating for KORN/FERRY INTERNATIONAL has BUY. The current P/E ratio indicates a significant discount compared to an average of 37.68 for the
not changed since 12/8/2016. As of 7/13/2017, the Professional Services industry and a value on par with the S&P 500 average of 24.41. To use another
stock was trading at a price of $34.25 which is 5.1% comparison, its price-to-book ratio of 1.80 indicates a discount versus the S&P 500 average of 3.04 and a
below its 52-week high of $36.07 and 71.8% above significant discount versus the industry average of 8.16. The price-to-sales ratio is well below both the S&P
its 52-week low of $19.94. 500 average and the industry average, indicating a discount. Upon assessment of these and other key
valuation criteria, KORN/FERRY INTERNATIONAL proves to trade at a discount to investment alternatives
2 Year Chart within the industry.
$40
BUY: $35.12
HOLD: $20.70
BUY: $30.03
$35 Price/Earnings 1 2 3 4 5 Price/CashFlow 1 2 3 4 5

premium discount premium discount
$30 KFY 23.30 Peers 37.68 KFY 18.29 Peers 19.80
• Discount. A lower P/E ratio than its peers can • Average. The P/CF ratio, a stock’s price divided by
$25 signify a less expensive stock or lower growth the company's cash flow from operations, is useful
expectations. for comparing companies with different capital
2015 2016 • KFY is trading at a significant discount to its peers. requirements or financing structures.
• KFY is trading at a valuation on par to its peers.
MOST RECENT RATINGS CHANGES

Price/Projected Earnings 1 2 3 4 5 Price to Earnings/Growth 1 2 3 4 5
premium discount premium discount
Date Price Action From To KFY 12.76 Peers 20.71 KFY 0.36 Peers 0.97
12/8/16 $30.03 Upgrade Hold Buy • Discount. A lower price-to-projected earnings ratio • Discount. The PEG ratio is the stock’s P/E divided
6/30/16 $20.70 Downgrade Buy Hold than its peers can signify a less expensive stock or by the consensus estimate of long-term earnings
7/13/15 $35.12 No Change Buy Buy lower future growth expectations. growth. Faster growth can justify higher price
Price reflects the closing price as of the date listed, if available • KFY is trading at a significant discount to its peers. multiples.
• KFY trades at a significant discount to its peers.
RATINGS DEFINITIONS & Price/Book 1 2 3 4 5 Earnings Growth 1 2 3 4 5

premium discount lower higher
DISTRIBUTION OF THESTREET RATINGS
KFY 1.80 Peers 8.16 KFY 140.98 Peers 26.99
(as of 7/13/2017)
• Discount. A lower price-to-book ratio makes a • Higher. Elevated earnings growth rates can lead to
43.81% Buy - We believe that this stock has the stock more attractive to investors seeking stocks capital appreciation and justify higher
opportunity to appreciate and produce a total return of with lower market values per dollar of equity on the price-to-earnings ratios.
more than 10% over the next 12 months. balance sheet. • KFY is expected to have an earnings growth rate
• KFY is trading at a significant discount to its peers. that significantly exceeds its peers.
30.69% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
Price/Sales 1 2 3 4 5 Sales Growth 1 2 3 4 5
premium discount lower higher
shares at this time and that its likelihood of positive total KFY 1.20 Peers 3.97 KFY 20.41 Peers 10.57
return is roughly in balance with the risk of loss.
• Discount. In the absence of P/E and P/B multiples, • Higher. A sales growth rate that exceeds the
the price-to-sales ratio can display the value industry implies that a company is gaining market
25.50% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with investors are placing on each dollar of sales. share.
the risk involved too great to compensate for any • KFY is trading at a significant discount to its • KFY has a sales growth rate that significantly
possible returns. industry on this measurement. exceeds its peers.
DISCLAIMER:
TheStreet Ratings
14 Wall Street, 15th Floor The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
New York, NY 10005 via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
www.thestreet.com other third-party data providers.
Research Contact: 212-321-5381
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
Sales Contact: 866-321-8726 for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.

BUY BUY BUY BUY: Korn/Ferry International

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

BUY BUY BUY BUY: Korn/Ferry International

Diunggah oleh

Hak Cipta:

Format Tersedia

July 16, 2017

PEER GROUP ANALYSIS INDUSTRY ANALYSIS

Acacia Research (ACTG).

NSP INSPERITY INC 71.50 1,506 22.00 3,021.60 68.93

TBI TRUEBLUE INC 26.55 1,130 NM 2,672.90 -17.55

COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Income out of 5 stars 3.5

THESTREET RATINGS RESEARCH METHODOLOGY

Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

RATINGS HISTORY VALUATION

$35 Price/Earnings 1 2 3 4 5 Price/CashFlow 1 2 3 4 5

MOST RECENT RATINGS CHANGES

RATINGS DEFINITIONS & Price/Book 1 2 3 4 5 Earnings Growth 1 2 3 4 5

Anda mungkin juga menyukai