January 4, 2018

KFY – Although KFY’s long-term outlook remains positive, management’s concerns about revenues and their backlog imply near-term upside may be limited


  • Korn/Ferry International (KFY:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 15.3x Uniform P/E. At these levels, markets have bearish expectations for the firm, suggesting longer-term upside remains warranted. However, given management’s concerns about developing talent, their backlog and revenues, near-term equity upside may be limited
  • Specifically, management appears concerned about their ability to develop talent and help augment talent searches, and might be concerned about their ability to execute effectively on their backlog. Moreover, they might be concerned about sequential revenue growth. As such, near-term equity upside may be limited, although longer-term upside remains warranted should the firm just sustain returns at current levels
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