Financial Analysis: Kelly Services (KELYA) and The Competition

Kelly Services (NASDAQ:KELYA) is one of 203 publicly-traded companies in the “Professional Services” industry, but how does it weigh in compared to its peers? We will compare Kelly Services to similar companies based on the strength of its valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Analyst Ratings

This is a breakdown of current recommendations for Kelly Services and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kelly Services	1	1	1	0	2.00
Kelly Services Competitors	1585	6450	9169	431	2.48

Kelly Services currently has a consensus target price of $20.00, indicating a potential upside of 18.01%. As a group, “Professional Services” companies have a potential upside of 24.74%. Given Kelly Services’ peers stronger consensus rating and higher probable upside, analysts clearly believe Kelly Services has less favorable growth aspects than its peers.

Institutional and Insider Ownership

76.3% of Kelly Services shares are owned by institutional investors. Comparatively, 57.4% of shares of all “Professional Services” companies are owned by institutional investors. 5.4% of Kelly Services shares are owned by insiders. Comparatively, 17.2% of shares of all “Professional Services” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

Kelly Services has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, Kelly Services’ peers have a beta of 0.97, indicating that their average stock price is 3% less volatile than the S&P 500.

Earnings and Valuation

This table compares Kelly Services and its peers gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Kelly Services	$4.25 billion	-$254.10 million	-2.17
Kelly Services Competitors	$3.29 billion	$228.38 million	35.96

Kelly Services has higher revenue, but lower earnings than its peers. Kelly Services is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Dividends

Kelly Services pays an annual dividend of $0.30 per share and has a dividend yield of 1.8%. Kelly Services pays out -3.8% of its earnings in the form of a dividend. As a group, “Professional Services” companies pay a dividend yield of 2.4% and pay out -164.4% of their earnings in the form of a dividend. Kelly Services lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Profitability

This table compares Kelly Services and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kelly Services	-6.73%	2.69%	1.19%
Kelly Services Competitors	-0.59%	20.60%	4.33%

Summary

Kelly Services peers beat Kelly Services on 13 of the 15 factors compared.

About Kelly Services

Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries. The company operates through five segments: Professional & Industrial; Science, Engineering & Technology; Education; Outsourcing & Consulting; and International. The Professional & Industrial segment delivers staffing, outcome-based, and permanent placement services providing administrative, accounting, and finance; light industrial; contact center staffing; and other workforce solutions. The Science, Engineering & Technology segment offers staffing, outcome-based, and permanent placement services in the areas of science and clinical research, engineering, technology, and telecommunications specialties. The Education segment provides staffing, permanent placement, and executive search services to pre-K-12 school districts and education organizations. The Outsourcing & Consulting segment offers managed service provider, recruitment process outsourcing, payroll process outsourcing, and executive coaching programs to customers on a global basis that includes its RocketPower brand. The International segment provides staffing, recruitment process outsourcing, and permanent placement services. The company serves customers in the United States, Canada, Mexico, Puerto Rico, France, Switzerland, Portugal, Russia, Italy, rest of Europe, and the Asia-Pacific region. Kelly Services, Inc. was founded in 1946 and is headquartered in Troy, Michigan.