Eye-Catching Hot Stock: Korn/Ferry International (NYSE: KFY)

On Monday, Shares of Korn/Ferry International (NYSE: KFY) rose 0.98% to $44.22. The stock recorded $43.76 as its minimum price and hit the max level of $44.85, during its most recent trading session. It traded total volume of 54,470 shares lower than the average volume of 609.03K shares.

Korn/Ferry International (KFY), a global organizational consulting firm, recently declared first quarter fee revenue of $465.60M.  First quarter diluted loss per share was $0.70 and adjusted diluted earnings per share were $0.78.  Adjusted diluted earnings per share for the first quarter excludes the $106.60M charge as discussed above and $3.10M related to retention awards from a prior acquisition, or $1.48 per share.

Fee revenue was $465.60M in Q1 FY’19, a boost of 16.0% (15.7% increases on a constant currency basis) contrast to Q1 FY’18.  The increase in fee revenue was because of organic growth in all solutions.

Operating margin was (11.8%) in Q1 FY’19 contrast to 10.5% in the year-ago quarter.  The decrease in operating margin was mainly because of the $106.60M tradename write-offs in Q1 FY’19 and a boost in compensation and benefits, partially offset by a boost in fee revenue.

Adjusted EBITDA margin was 15.2%, contrast to 15.0% in the year-ago quarter.

Fee revenue was $192.90M in Q1 FY’19, a boost of $31.70M or 19.7% (19.3% on a constant currency basis) contrast to Q1 FY’18.  The increase in fee revenue was attributable to higher fee revenue in all regions.

Operating income was $40.90M in Q1 FY’19 contrast to $32.90M in Q1 FY’18. Operating margin was 21.2% in Q1 FY’19 contrast to 20.4% in the year-ago quarter.  The increase in operating income was because of higher fee revenue in Q1 FY’19 contrast to Q1 FY’18, partially offset by a boost in compensation and benefits expense driven by 3.6% increase in average headcount and a boost in performance related bonus expense.

Adjusted EBITDA was $46.80M in Q1 FY’19 with an Adjusted EBITDA margin of 24.2% contrast to $35.20M and 21.9%, respectively, in the year-ago quarter.

Fee revenue was $195.40M in Q1 FY’19 contrast to $179.50M in Q1 FY’18, a boost of $15.90M or 8.9% (8.6% on a constant currency basis) contrast to Q1 FY’18.  The increase in fee revenue was driven by increases in each of our Advisory solution areas, mainly from Consulting.

Operating loss was $83.10M in Q1 FY’19 with an operating margin of (42.5%) contrast to operating income of $19.10M and an operating margin of 10.6% in the year-ago quarter.  The change of $102.20M from operating income in the year-ago quarter to operating loss in the current quarter was mainly because of the tradename write-offs in Q1 FY’19 of $106.60M.

Adjusted EBITDA was $34.50M in Q1 FY’19 with an Adjusted EBITDA margin of 17.7% contrast to $30.40M and 16.9%, respectively, in the year-ago quarter.

Fee revenue was $77.30M in Q1 FY’19, a boost of $16.70M or 27.6% (27.2% increases on a constant currency basis), contrast to the year-ago quarter.  The higher fee revenue was mainly driven by a boost in fee revenue in recruitment process outsourcing and professional search of $9.30M and $7.40M, respectively, in Q1 FY’19 contrast to Q1 FY’18.

Operating income was $11.60M in Q1 FY’19, a boost of $3.40M contrast to Q1 FY’18 operating income of $8.20M.  Operating margin was 15.1% in the current quarter contrast to 13.6% in the year-ago quarter.

EBITDA was $12.50M during Q1 FY’19, a boost of $3.50M contrast to Q1 FY’18.  EBITDA margin was 16.2% in Q1 FY’19 and 14.9% in Q1 FY’18.

Outlook:

Assuming worldwide economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:

  • Q2 FY’19 fee revenue is expected to be in the range of $470.0M and $490.0M; and
  • Q2 FY’19 diluted earnings per share is likely to range between $0.73 to $0.81.

On a consolidated adjusted basis:

  • Q2 FY’19 Adjusted diluted earnings per share is expected to be in the range from $0.76to $0.84.

KFY has the market capitalization of $2.51B and its EPS growth ratio for the past five years was 27.30%. The return on assets ratio of the Company was 3.00% while its return on investment ratio stands at 10.10%. Price to sales ratio was 1.33 while 90.90% of the stock was owned by institutional investors.

Penny Cook

Penny Cook is passionate about business and finance news with over 5 years in the industry starting as a writer working her way up into senior positions. She is the driving force behind www.nasdaqjournal.com with a vision to broaden the company’s readership throughout 2016. Cook is an editor and reporter of “Services” Category.

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