Kelly Services (KELYA) AI Stock Analysis

• Market Cap: $441.83M
• Dividend Yield: 2.39%
• Average Volume (3M): 286.14K
• Price to Earnings (P/E): 11.4
• Beta (1Y): 0.59
• Revenue Growth: -3.49%
• EPS Growth: -140.04%
• Country: US
• Employees: 5,570
• Sector: Industrials
• Sector Strength: 90
• Industry: Staffing & Employment Services
• EPS (TTM): 0.39
• Shares Outstanding: 31,907,118
• 10 Day Avg. Volume: 316,670
• 30 Day Avg. Volume: 286,141
• PEG Ratio: 7.09
• Price to Book (P/B): 0.35
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 26.46
• Enterprise Value/Market Cap: 1.54
• Enterprise Value/Revenue: 0.04
• Enterprise Value/Gross Profit: 0.79
• Enterprise Value/Ebitda: 2.13
• 1Y Price Target: $27.00
• Price Target Upside: 115.48% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

Kelly Services is currently facing significant financial hurdles, notably in revenue and profitability. While technical trends and a supportive earnings call provide some optimism, the valuation remains a concern due to negative earnings. Despite these challenges, the company's strong cash flow and shareholder support for strategic plans offer some positive aspects.

Positive Factors

Earnings

Q4/24 revenue of $1.191 billion exceeded our estimate of $1.157 billion and the consensus of $1.153 billion.

Market Performance

Kelly continued to gain market share and outperform the broader industry.

Segment Growth

Organic revenue continued to benefit from strong performance by the Education segment, which grew 12.1% year-over-year in Q4/24 due to improved staffing fill rates, higher bill rates, and new customer wins.

Negative Factors

Revenue Decline

On a reported basis, Q4/24 revenue was down -3.3% year-over-year, with the decline driven by the sale of the company’s lower-margin European staffing operations at the beginning of 2024.

Segment Challenges

Demand for IT staffing remained challenged, consistent with industry trends, as clients continued to take a cautious approach to initiating large technology deployments.

Segment Slowdown

Organic revenue growth was impacted by an unexpected demand slowdown within the Science, Engineering & Technology (SET) segment during July and August amidst the uncertain macroeconomic environment.

Kelly Services Business Overview & Revenue Model

Company Description

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 direct-hire services in the areas of office, professional, light industrial, and contact center specialties. The Science, Engineering & Technology segment offers staffing, outcome-based, and direct-hire services in the areas of science and clinical research, engineering, information technology, and telecommunications specialties. The Education segment provides staffing and executive search services to early childhood, and higher education markets. The Outsourcing & Consulting segment offers recruitment process outsourcing (RPO), payroll process outsourcing, and talent advisory services, as well as managed services. The International segment provides staffing, RPO, and direct-hire services in Europe and Mexico. The company serves customers in the United States, Canada, Mexico, Puerto Rico, France, Switzerland, Portugal, Russia, the United Kingdom, Italy, Germany, Ireland, rest of Europe, and the Asia-Pacific region. Kelly Services, Inc. was founded in 1946 and is headquartered in Troy, Michigan.

How the Company Makes Money

Kelly Services makes money primarily through its staffing services, which include temporary staffing, permanent placement, and outsourcing. The company generates revenue by charging client companies for the staffing solutions it provides, typically based on a markup over the wages paid to temporary employees or a fee for successful permanent placements. Key revenue streams include fees from temporary staffing assignments, where Kelly Services earns a percentage of the employee's hourly rate, and direct-hire placements, where the company receives a one-time fee. Additionally, Kelly Services may engage in managed service provider (MSP) programs and recruitment process outsourcing (RPO), offering strategic workforce planning and management services. Partnerships with various organizations and businesses, as well as its ability to adapt to market trends and demands, significantly contribute to its earnings.

Kelly Services Financial Statement Overview

Summary

Kelly Services faces significant financial challenges, as evidenced by declining revenue, profitability, and cash flow. The company has increased its leverage, which, combined with negative income, raises concerns about financial stability. While the balance sheet reflects a stable equity position, the negative trends in income and cash flow highlight the need for strategic financial improvements to enhance profitability and liquidity.

Income Statement

The income statement shows a declining trend in revenue and profitability over recent years. Gross profit margin is absent for the latest period, indicating potential issues in revenue generation or cost management. EBIT and EBITDA margins are negative, pointing to operational challenges. The net profit margin has also turned negative, reflecting operating losses. These factors collectively suggest declining financial performance and profitability.

Balance Sheet

The balance sheet indicates a moderately leveraged position with a debt-to-equity ratio that has increased due to rising debt. The equity ratio is stable, suggesting a balanced asset structure. However, return on equity has suffered due to negative net income. The stability in stockholders' equity provides some assurance, but the increased leverage and negative profitability pose risks.

Cash Flow

Cash flow analysis reveals a decrease in operating cash flow and free cash flow over time, indicating potential liquidity issues. The operating cash flow to net income ratio is positive, but the free cash flow to net income ratio is negative due to negative profits. Although financing activities have provided some cash inflow, the cash flow situation reflects potential liquidity and cash management challenges.

Breakdown
Dec 2024	Dec 2023	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
4.33B	4.84B	4.97B	4.91B	4.52B
	Gross Profit
882.60M	961.40M	1.01B	919.20M	827.60M
	EBIT
-15.10M	24.30M	142.20M	48.60M	137.60M
	EBITDA
39.90M	78.20M	-13.40M	241.10M	-59.10M
	Net Income Common Stockholders
-600.00K	36.40M	-63.30M	156.10M	-72.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
39.00M	125.80M	153.70M	112.70M	223.00M
	Total Assets
2.63B	2.58B	2.66B	2.89B	2.56B
	Total Debt
302.60M	51.30M	70.40M	78.90M	87.40M
	Net Debt
263.60M	-74.50M	-83.30M	-33.80M	-135.60M
	Total Liabilities
1.40B	1.33B	1.41B	1.56B	1.36B
	Stockholders Equity
1.23B	1.25B	1.25B	1.34B	1.20B
Cash Flow		Free Cash Flow
15.80M	61.40M	-88.30M	73.80M	170.50M
	Operating Cash Flow
26.90M	76.70M	-76.30M	85.00M	186.00M
	Investing Cash Flow
-361.60M	-14.10M	167.50M	-180.70M	9.80M
	Financing Cash Flow
214.80M	-59.60M	-50.60M	-8.10M	-8.10M

Kelly Services Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 12.53
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KELYA, the sentiment is Positive. The current price of 12.53 is above the 20-day moving average (MA) of 11.76, above the 50-day MA of 12.32, and below the 200-day MA of 15.80, indicating a neutral trend. The MACD of 0.07 indicates Negative momentum. The RSI at 58.76 is Neutral, neither overbought nor oversold. The STOCH value of 74.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KELYA.

Kelly Services Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MHH	67 Neutral	$95.29M	46.37	2.52%	―	3.93%	―
HQI	66 Neutral	$136.36M	39.98	5.67%	2.46%	-7.66%	-34.08%
Sector *	64 Neutral	$4.42B	11.99	5.16%	249.23%	4.02%	-11.68%
HSII	64 Neutral	$887.72M	126.17	1.71%	1.39%	6.17%	-85.16%
KELYA	56 Neutral	$441.83M	11.43	-1.60%	2.39%	-3.49%	-140.04%
TBI	47 Neutral	$167.24M	―	-36.98%	―	-16.76%	-1127.93%
ZIP	38 Underperform	$510.97M	225.24	-2897.28%	―	-20.95%	-152.29%

Kelly Services Corporate Events

Kelly Services Approves 2025 Equity Incentive Plan

On May 8, 2025, Kelly Services, Inc. held its annual stockholders meeting virtually, where the 2025 Equity Incentive Plan was approved. The meeting also saw the election of board members, approval of executive compensation, and ratification of PricewaterhouseCoopers LLP as the independent auditor for 2025, indicating strong shareholder support for the company’s strategic initiatives.

Spark’s Take on KELYA Stock

According to Spark, TipRanks’ AI Analyst, KELYA is a Neutral.

The overall score reflects significant financial challenges faced by Kelly Services, with declining revenue, profitability, and cash flow being major concerns. The technical indicators suggest some caution, and the valuation is problematic due to negative earnings, though the dividend yield offers a silver lining. The earnings call presented a mixed outlook with both growth prospects and notable challenges, contributing to a cautious but not overly pessimistic view.

To see Spark’s full report on KELYA stock, click here.

Kelly Services Announces Retirement of Chief Accounting Officer

On March 6, 2025, Kelly Services announced that Laura Lockhart, Vice President, Chief Accounting Officer, and Corporate Controller, plans to retire by December 31, 2025, or earlier if a successor is appointed. Her retirement is not due to any disputes with the company, and she is expected to assist with the transition after her successor is appointed.

Kelly Services Announces Retirement of Director Donald Parfet

On February 12, 2025, Kelly Services announced that Donald R. Parfet intends to retire as a director at the 2025 annual shareholders meeting. Mr. Parfet has contributed significantly to the company, serving as a director since 2004, Chairman of the Board from 2018 to 2023, and Lead Director from 2012 to 2018. His retirement is not due to any disagreements with the company’s operations, policies, or practices.