Here's Why This Cyclical Company's Stock Rocketed 26% Higher Today
Key Points
Robert Half is a highly cyclical company, and that cycle may be turning favorable again.
A better recruitment market is good news for the economy at large.
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Recruitment companies are often seen as bellwethers of the economy, so when Robert Half International's (NYSE: RHI) stock rises a whopping 26% by 1 p.m., the market is likely to take notice.
Why Robert Half's stock soared
As the price chart below indicates, it's been a difficult few years for the company, but its fourth-quarter earnings release brought much-welcome good news and an indication of an inflection point that could signal a prolonged recovery for a company with a history of cyclical trading patterns.
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While the company's year-over-year revenue and earnings continued to decline, CEO Keith Waddell noted that "We are very pleased to see talent solutions and enterprise revenues return to positive sequential growth on a same-day constant currency basis for the first time in over three years."
Moreover, Waddell said the positive momentum carried through into the first weeks of January, and the company beat the midpoint of its earnings and revenue guidance. Waddell's positive commentary on small businesses could be good news for a company like UPS, which is increasingly relying on the small and medium-sized business market for growth.
Image source: Getty Images.
Where next for Robert Half International
It's unlikely to be a quick turnaround, with Waddell noting on the earnings call that, based on its current trends, the company would only return to year-over-year growth in the third quarter of 2025.
Still, investors in cyclical stocks look for inflection points, and if Robert Half's earnings reports through the first half confirm the momentum exiting 2025, then the stock could appreciate substantially in 2026. It would also signal good news for the economy a large -- something to look out for.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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