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KFY – Management’s confidence in their balance sheet, their positioning, and virtual delivery suggest equity upside is warranted for KFY

July 21, 2020

  • Korn Ferry (KFY:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) earnings, with a 16.3x Uniform P/E, implying bearish expectations for the firm. However, management is confident about their balance sheet, positioning, and virtual delivery, suggesting this is overly pessimistic
  • Specifically, management is confident their balance sheet has high levels of cash and liquidity, their operational guardrails will preserve their position of strength for recovery, and that they achieved an uptick in their Diversity & Inclusion (D&I) business as they took a proactive stance on social equality and race. They are also confident that the impact of their virtual delivery development will be shown in their Q1 2021
  • Given the firm’s strong business profile and secular executive staffing tailwinds, and management confidence about business prospects, market expectations are far too bearish, suggesting upside is warranted for KFY

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