Does the Recent 61% Drop in Robert Half Signal a Compelling Opportunity for 2025?

• Wondering whether Robert Half is a bargain hiding in plain sight or a stock to steer clear of? You are definitely not alone in searching for the real value here.
• After a sharp slide of 61.2% over the last year and a bounce of 4.8% in the past week, the stock's movement could indicate shifting market sentiment or a signal for fresh growth potential.
• Robert Half has been in the headlines due to changing industry trends and recent management announcements, both of which have influenced investors' outlook on future prospects. These developments help to explain some of the notable share price movements recently.
• On our valuation check, Robert Half scores a 5 out of 6, which positions it near the top in terms of undervalued opportunities. Next, we will explore exactly how that score is calculated and, importantly, whether there might be an alternative perspective that provides a clearer sense of value.

Find out why Robert Half's -61.2% return over the last year is lagging behind its peers.

Approach 1: Robert Half Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model values a business by extrapolating its future cash flows and discounting them back to today's value. This approach provides a forward-looking estimate of what the company may be worth.

For Robert Half, the most recent Free Cash Flow (FCF) stands at $244.91 million. Analysts expect this number to grow year over year, reaching $312 million by 2027. Beyond that, cash flows are projected further into the future, ultimately rising to around $471.39 million in 2035 according to extrapolated estimates. All these projections are discounted back using a rigorous two-stage Free Cash Flow to Equity model. This ensures today's valuation takes into account both near-term analyst forecasts and longer-term trends.

The DCF analysis results in an intrinsic value of $84.62 per share. Compared to current market valuations, this suggests Robert Half is trading at a 67.8% discount to its estimated true worth. The DCF model presents a view of a company that may currently be undervalued by the market.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Robert Half is undervalued by 67.8%. Track this in your watchlist or portfolio, or discover 927 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Robert Half.

Approach 2: Robert Half Price vs Earnings

For established, profitable companies like Robert Half, the price-to-earnings (PE) ratio stands out as the most widely used metric for valuation. The PE ratio measures what investors are willing to pay today for each dollar of the company’s earnings, making it a direct reflection of both investor expectations and confidence in those earnings.

Interpreting a "normal" or "fair" PE ratio is not one-size-fits-all, as it depends on expectations for future growth and the perceived risks. Companies with strong growth prospects and stable earnings tend to command higher PE ratios, while those facing challenges or uncertainty typically trade at lower multiples.

Robert Half’s current PE ratio is 17.5x, which is below both its peer group average of 19.6x and the broader Professional Services industry average of 24.3x. At first glance, this discounted multiple could suggest undervaluation, but context matters.

This is where the Simply Wall St "Fair Ratio" comes in. This proprietary metric evaluates a company’s appropriate PE by analyzing its unique growth profile, profit margins, risk factors, industry positioning, and market capitalization, providing a far more nuanced benchmark than the blunt industry or peer multiples. For Robert Half, the Fair Ratio is 27.3x, considerably above its current valuation.

Because the actual PE ratio is meaningfully below the Fair Ratio, the analysis suggests Robert Half is undervalued on this metric, potentially offering value for investors seeking exposure to the sector.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1433 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Robert Half Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is a structured story you create based on your personal view of a company, combining your assumptions about fair value, future revenue, earnings, and margins. This approach goes beyond the raw numbers and connects them to your unique perspective.

Narratives bridge a company's business story with a financial forecast and a target fair value, letting you see how well your expectations line up against reality. On Simply Wall St’s Community page, Narratives are available as an intuitive tool used by millions of investors, empowering you to compare your Fair Value to the current share price with just a few clicks.

What makes Narratives especially powerful is that they update automatically as fresh news or earnings are announced, ensuring your analysis always reflects the latest information. For Robert Half, one investor’s Narrative might be optimistic, projecting sustained demand for skilled talent and pricing the stock as high as $55.00. Another, more cautious Narrative might set a price target as low as $33.00, factoring in persistent margin compression and slow recovery. Narratives enable you to define your own expectations and make smarter, more personalized investment decisions in real time.

Do you think there's more to the story for Robert Half? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.