Robert Half reported flat third-quarter revenue but achieved its first bottom-line earnings increase since 2022.
A recent wave of government fines against major banks has created a highly lucrative pipeline of compliance projects for this company.
The stock erased its recent losses, but shares are still down significantly over the past three years due to stagnant long-term growth.
Shares of Robert Half (NYSE:RHI) soared on Friday. The human resources veteran's stock is up 20.1% at 12:35 p.m. ET, down from an intraday peak of 22.9%. The company reported Q3 2026 results on Thursday evening, and its financials were largely in line with analyst expectations.
Wait, what? Simply meeting Wall Street's targets usually doesn't result in single-day jumps of more than 20%.
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Robert Half's third-quarter revenue came in at $1.36 billion, which was essentially flat year over year on an adjusted basis. However, earnings per share jumped 14% to $0.49, marking the company's first quarterly bottom-line increase since 2022.
The core Talent Solutions staffing segment also finally returned to growth, ticking up 2% as demand for technology, finance, and accounting professionals stabilized. Profitability improved across the board, with adjusted operating margins expanding to 5.3% from 4.5% last year, largely thanks to recent cost-cutting measures and better pricing on contract placements.
The real catalyst behind today's massive stock jump was the earnings call, where management delivered bullish commentary on the Protiviti consulting business.
While Protiviti's revenue actually slipped 3% in the third quarter, a recent wave of severe government fines against large financial institutions has created a massive pipeline of anti-money laundering (AML) compliance projects. Since Protiviti already works with 80% of the world's largest banks, it is positioned to capture this highly lucrative, contractor-heavy remediation work.
Friday's price jump brought Robert Half's stock back to its level before the macroeconomic panic in September. The company is finding ways to stay relevant despite a cautious job market. However, the stock is still down 38% in three years and 60% since October 2021, reflecting Robert Half's stagnant long-term revenue growth.
While Protiviti's success is a strong short-term catalyst, I prefer to look to the modern freelance economy when investing in the changing world of work.
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Anders Bylund 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.