Robert Half’s stock price has taken a beating over the past six months, shedding 40.5% of its value and falling to $35.94 per share. This might have investors contemplating their next move.

Is there a buying opportunity in Robert Half, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

Why Do We Think Robert Half Will Underperform?

Even with the cheaper entry price, we don't have much confidence in Robert Half. Here are three reasons why we avoid RHI and a stock we'd rather own.

1. Long-Term Revenue Growth Flatter Than a Pancake

A company’s long-term sales performance can indicate its overall quality.

Any business can put up a good quarter or two, but the best consistently grow over the long haul.

Unfortunately, Robert Half struggled to consistently increase demand as its $5.57 billion of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and signals it’s a low quality business.

2. EPS Trending Down

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Sadly for Robert Half, its EPS declined by 11.3% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

3. New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Robert Half’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Final Judgment

Robert Half doesn’t pass our quality test. Following the recent decline, the stock trades at 15.9× forward P/E (or $35.94 per share). At this valuation, there’s a lot of good news priced in - you can find more timely opportunities elsewhere. We’d recommend looking at our favorite semiconductor picks and shovels play.

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