This week the Valens Securities team highlights our most interesting equity insight from across our tools and our analysis.
Korn/Ferry International (KFY): Markets expect an ROA’ decline post-Hay acquisition, but macro tailwinds and management alignment point to continued strong execution despite of some potential near-term operational headwinds
KFY is trading at a 13.4x UAFRS-based P/E (or V/E’), in the middle of historical valuations. At current valuations, market expectations are still relatively muted. Markets are expecting modest 5% UAFRS adjusted Asset growth, with UAFRS adjusted ROA remaining level around 2016 recent lows of 19%. On the other hand, analysts are actually projecting adjusted ROA to ramp going forward, with adjusted ROA reaching 27%, levels not seen since 2007-2008, as the firm benefits from an improving economic environment.