Financial Analysis: Kelly Services (NASDAQ:KELYB) & Korn/Ferry International (NYSE:KFY)

Kelly Services (NASDAQ:KELYB) and Korn/Ferry International (NYSE:KFY) are both business services companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, profitability, institutional ownership, valuation, earnings and analyst recommendations.

Profitability

This table compares Kelly Services and Korn/Ferry International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kelly Services	-6.44%	3.07%	1.41%
Korn/Ferry International	9.29%	14.36%	7.32%

Valuation and Earnings

This table compares Kelly Services and Korn/Ferry International”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kelly Services	$4.25 billion	0.14	-$254.10 million	($7.60)	-2.30
Korn/Ferry International	$2.76 billion	1.35	$246.06 million	$5.06	14.24

Korn/Ferry International has lower revenue, but higher earnings than Kelly Services. Kelly Services is trading at a lower price-to-earnings ratio than Korn/Ferry International, indicating that it is currently the more affordable of the two stocks.

Dividends

Kelly Services pays an annual dividend of $0.30 per share and has a dividend yield of 1.7%. Korn/Ferry International pays an annual dividend of $2.20 per share and has a dividend yield of 3.1%. Kelly Services pays out -3.9% of its earnings in the form of a dividend. Korn/Ferry International pays out 43.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Korn/Ferry International has increased its dividend for 5 consecutive years. Korn/Ferry International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

0.2% of Kelly Services shares are owned by institutional investors. Comparatively, 98.8% of Korn/Ferry International shares are owned by institutional investors. 93.1% of Kelly Services shares are owned by insiders. Comparatively, 1.0% of Korn/Ferry International shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for Kelly Services and Korn/Ferry International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kelly Services	1	0	0	0	1.00
Korn/Ferry International	0	1	3	0	2.75

Korn/Ferry International has a consensus target price of $74.67, indicating a potential upside of 3.63%. Given Korn/Ferry International’s stronger consensus rating and higher possible upside, analysts clearly believe Korn/Ferry International is more favorable than Kelly Services.

Volatility and Risk

Kelly Services has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500. Comparatively, Korn/Ferry International has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500.

Summary

Korn/Ferry International beats Kelly Services on 14 of the 17 factors compared between the two stocks.

About Kelly Services

Kelly Services, Inc. engages in staffing and workforce solutions. It operates through the following segments: Americas Staffing, Global Talent Solutions, and International Staffing. The Americas Staffing segment delivers temporary staffing, as well as direct-hire placement services, in a number of specialty staffing services, including office, education, marketing, electronic assembly, light industrial, science, engineering, and information technology in United States, Puerto Rico, Canada, Mexico and Brazil. The Global Talent Solutions segment offers outsourcing, consulting, and centrally delivered staffing business. The International Staffing segment relates to branch-delivered staffing business in the Europe, Middle East, and Africa region, as well as in the Asia Pacific. The company was founded by William Russell Kelly on October 7, 1946 and is headquartered in Troy, MI.

About Korn/Ferry International

Korn Ferry, together with its subsidiaries, provides organizational consulting services worldwide. It operates through four segments: Consulting, Digital, Executive Search, and Recruitment Process Outsourcing (RPO) & Professional Search. The company provides executive search services to recruit board level, chief executive, other senior executive, and general management talent of organizations. It also offers organizational strategy, assessment and succession, leadership and professional development, and total reward services. In addition, the company provides RPO, business project, professional search, and outsource recruiting solutions. Further, the company offers tech-enabled solutions that identify structures, roles, capabilities, and behaviors to drive businesses. It serves public and private companies, and middle market and emerging growth companies, as well as government and non-profit organizations. The company was formerly known as Korn/Ferry International and changed its name to Korn Ferry in January 2019. Korn Ferry was founded in 1969 and is based in Los Angeles, California.