Key Takeaways AI sell-off and geopolitical tensions roil markets, putting the screened broker-favored stocks in focus. Arrow Electronics shows strong earnings beats amid cyclical tailwinds. Screening criteria include low price/sales ratios, strong volume and top market capitalization ranks. After a strong January, the U.S. equity market has been rather subdued this month amid an AI-driven sell-off. The tech upheaval resulted in the already under-pressure software stocks taking a fresh blow, after AI startup ...

Core Viewpoint - Cross Country Healthcare has announced a leadership transition, appointing Kevin C. Clark as the new President and CEO, effective December 14, 2025, following the separation of John A. Martins from the company [1][2]. Group 1: Leadership Transition - John A. Martins has separated from Cross Country Healthcare and ceased to serve on the Board of Directors [1]. - Kevin C. Clark, the current Chairman and co-founder of the company, will succeed Martins as President and CEO while continuing his role as Chairman [1][2]. - Clark has nearly 40 years of experience in the healthcare staffing industry and has previously led Cross Country from 2019 to 2022, a period marked by rapid growth and strong financial results [2]. Group 2: Strategic Vision - The Board believes that Clark's return as CEO is timely, especially after the termination of the transaction with Aya Healthcare, and is expected to usher in a new era of innovative, tech-enabled workforce solutions [3]. - Clark emphasized the company's opportunity to redefine its trajectory as a leader in tech-enabled workforce solutions, leveraging its nearly 40-year legacy [3]. - The company plans to sharpen its focus, reduce costs, and optimize capital allocation to drive sustainable, long-term profitable growth for shareholders [3]. Group 3: Company Overview - Cross Country Healthcare is a market-leading, tech-enabled workforce solutions and advisory firm with nearly 40 years of industry experience [4]. - The company aims to help clients tackle complex labor-related challenges and achieve high-quality outcomes through data-driven insights [4].

Core Viewpoint - Cross Country Healthcare's stock (CCRN) experienced a decline of 6.16% on December 3rd, 2025, due to the lack of an update regarding its merger agreement with Aya Healthcare, which was a specified fallback deadline [1]. Company Summary - The stock price drop indicates market sensitivity to merger news and the importance of timely communication from the company regarding strategic developments [1]. Industry Context - The healthcare staffing industry, represented by companies like Cross Country Healthcare, is influenced by merger activities, which can significantly impact stock performance and investor sentiment [1].

Market Overview - U.S. stocks experienced a slight increase, with the Dow Jones up 0.1% to 47,930.00, NASDAQ rising 0.01% to 23,454.19, and S&P 500 gaining 0.1% to 6,856.66 [1] - Financial shares saw a rise of 0.4%, while health care stocks fell by 0.6% [1] Company Performance - Dollar General Corporation's shares surged over 7% after reporting Q3 earnings of $1.28 per share, exceeding the analyst consensus estimate of 95 cents, and quarterly sales of $10.649 billion, surpassing the estimate of $10.639 billion [2] Commodity Market - Oil prices decreased by 0.2% to $58.86, while gold prices increased by 0.1% to $4,234.70. Silver fell by 1.5% to $57.74, and copper dropped 0.5% to $5.3620 [5] International Markets - European shares rose, with the eurozone's STOXX 600 up 0.5%, Spain's IBEX 35 Index up 0.5%, London's FTSE 100 up 0.2%, Germany's DAX 40 gaining 0.9%, and France's CAC 40 rising 0.5% [6] - Asian markets closed mostly higher, with Japan's Nikkei gaining 2.33% and Hong Kong's Hang Seng rising 0.68% [7] Notable Stock Movements - Polyrizon Ltd. shares increased by 134% to $16.61 following positive preclinical test data [8] - KALA BIO, Inc. shares surged 50% to $1.39 after Oxford Finance LLC acquired a significant stake [8] - Genesco Inc. shares dropped 28% to $25.84 after reporting disappointing Q3 results and lowering FY26 guidance [8] - Cross Country Healthcare, Inc. shares fell 20% to $7.57 after terminating a merger agreement [8]

Core Viewpoint - Cross Country Healthcare has terminated its merger agreement with Aya Holdings II Inc., resulting in a $20 million termination fee payable by Aya Healthcare to Cross Country Healthcare [1]. Group 1: Merger Agreement Details - The merger was subject to various closing conditions, including a review by the U.S. Federal Trade Commission (FTC) under the Hart-Scott-Rodino Antitrust Improvements Act [2]. - The FTC issued a "Second Request" for additional information on February 20, 2025, leading to an extension of the HSR waiting period and the merger agreement end date [3]. - Due to a government shutdown, the HSR waiting period was extended, ultimately exceeding the termination date of the merger agreement [3]. Group 2: Company Response and Future Outlook - Cross Country Healthcare made efforts to expedite the FTC review but could not reach an agreement with Aya Healthcare to extend the merger agreement [4]. - The CEO of Cross Country Healthcare expressed confidence in the company's strategic plan and operational resilience, highlighting a strong cash position and no debt [5]. - The company plans to initiate stock repurchases of up to $40 million, reflecting its financial strength and commitment to shareholder value [5].

Core Insights - Cross Country Healthcare (CCRN) reported quarterly earnings of $0.03 per share, missing the Zacks Consensus Estimate of $0.04 per share, and down from $0.12 per share a year ago [1] - The company posted revenues of $250.05 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 6.45%, and down from $315.12 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was -25.00%, and the company has surpassed consensus EPS estimates only once in the last four quarters [2] - A quarter ago, the company was expected to post earnings of $0.07 per share but instead reported a loss of $0.01, resulting in a surprise of -114.29% [2] Stock Performance - Cross Country shares have declined approximately 31.6% since the beginning of the year, contrasting with the S&P 500's gain of 16.4% [4] - The current Zacks Rank for the stock is 4 (Sell), indicating expectations of underperformance in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.05 on revenues of $279.41 million, and for the current fiscal year, it is $0.14 on revenues of $1.11 billion [8] - The estimate revisions trend for Cross Country was unfavorable prior to the earnings release, which may impact future stock movements [6][7] Industry Context - The Staffing Firms industry, to which Cross Country belongs, is currently ranked in the bottom 9% of over 250 Zacks industries, suggesting a challenging environment [9] - Another company in the same industry, Korn/Ferry (KFY), is expected to report quarterly earnings of $1.30 per share, reflecting a year-over-year change of +7.4% [10]

Financial Performance - Consolidated revenue for Q3 2025 decreased by 20.6% year-over-year to $250.1 million, primarily due to volume declines in the Nurse and Allied Staffing and Physician Staffing segments [124]. - Net loss attributable to common stockholders in Q3 2025 was $4.8 million, compared to net income of $2.6 million in the same period last year [124]. - Revenue from services decreased 20.9% to $817.5 million for the nine months ended September 30, 2025, compared to $1.0 billion for the same period in 2024, primarily due to volume declines in Nurse and Allied Staffing [145]. - Net loss attributable to common stockholders was $11.9 million for the nine months ended September 30, 2025, compared to a net loss of $10.8 million for the same period in 2024, representing a 10.4% increase in loss [144]. Segment Performance - Homecare Staffing segment experienced growth of 29.1% year-over-year, partially offsetting declines in other segments [124]. - Nurse and Allied Staffing accounted for approximately 81% of total revenue in Q3 2025, while Physician Staffing represented about 19% [126]. - Contribution income for Nurse and Allied Staffing decreased 26.1% to $14.2 million for the three months ended September 30, 2025, compared to $19.3 million for the same period in 2024 [162]. - Revenue for Physician Staffing decreased by $2.2 million, or 4.3%, to $48.1 million for the three months ended September 30, 2025, primarily due to a decrease in billable days [164]. - For the nine months ended September 30, 2025, Nurse and Allied Staffing revenue decreased by $220.0 million, or 24.8%, to $668.5 million, driven by a 17.4% decline in professionals on assignment [168]. Expenses and Costs - Direct operating expenses decreased by 20.7% to $199.1 million, reflecting the overall revenue decline [135]. - Selling, general and administrative expenses decreased by 13.6% to $46.9 million, with an increase in expenses as a percentage of total revenue to 18.8% [136]. - Direct operating expenses decreased 20.7% to $651.9 million for the nine months ended September 30, 2025, as compared to $821.8 million for the same period in 2024, with direct operating expenses as a percentage of total revenue increasing to 79.7% [146]. - Selling, general and administrative expenses decreased 16.0% to $149.4 million for the nine months ended September 30, 2025, compared to $177.8 million for the same period in 2024, with expenses as a percentage of total revenue increasing to 18.3% [147]. - Acquisition and integration-related costs totaled $12.2 million for the nine months ended September 30, 2025, primarily related to the pending Aya Merger, with no such costs reported for the same period in 2024 [150]. - Restructuring costs were $2.4 million for the nine months ended September 30, 2025, down from $4.1 million for the same period in 2024 [151]. - Legal and other losses decreased significantly to $2.2 million for the nine months ended September 30, 2025, compared to $7.6 million for the same period in 2024 [152]. Cash Flow and Liquidity - Cash and cash equivalents totaled $99.1 million as of September 30, 2025, with cash flow from operating activities at $20.1 million for the quarter [125]. - Net cash provided by operating activities decreased by $65.9 million to $30.0 million for the nine months ended September 30, 2025 [178]. - As of September 30, 2025, the company reported $99.1 million in cash and cash equivalents, with working capital decreasing by $5.0 million to $209.6 million [175]. - Borrowing base availability under the ABL was $121.4 million as of September 30, 2025, with no borrowings drawn [182]. Mergers and Acquisitions - The company is in the process of a merger with Aya Holdings II Inc., with the end date extended to December 3, 2025, pending regulatory review [127]. - The company continues to evaluate acquisition opportunities to enhance its business, including recent acquisitions like Workforce Solutions Group, Inc. [122]. Operational Metrics - Average Nurse and Allied Staffing revenue per FTE per day decreased to $351 for the nine months ended September 30, 2025, down from $383 for the same period in 2024, a decline of 8.4% [160]. - The average number of FTEs on contract decreased by 16.8% to 20,695 for the three months ended September 30, 2025, compared to the prior year [163]. - Total days filled decreased by 15.3% to 20,695 for the three months ended September 30, 2025, while revenue per day filled increased to $2,324 [166]. - Corporate overhead decreased to $13.7 million for the three months ended September 30, 2025, from $15.5 million in the prior year, representing 5.5% of consolidated revenue [167].

Financial Performance - Third quarter consolidated revenue was $250.1 million, a decrease of 21% year-over-year and 9% sequentially [3]. - Net loss attributable to common stockholders was $4.8 million, compared to net income of $2.6 million in the prior year, representing a 287% increase in loss [2]. - Adjusted EBITDA was $6.5 million, or 2.6% of revenue, down from $10.3 million, or 3.3% of revenue in the prior year [5]. - Revenue from services for Q3 2025 was $250,052, a decrease of 20.7% compared to $315,119 in Q3 2024 [22]. - Net loss attributable to common stockholders for Q3 2025 was $(4,774), compared to a net income of $2,555 in Q3 2024 [22]. - Adjusted EBITDA for Q3 2025 was $6,524, with an adjusted EBITDA margin of 2.6%, down from 3.3% in Q3 2024 [24]. - Contribution income for Q3 2025 was $18.550 million, down 22% from $23.880 million in Q3 2024 [28]. - The company reported a basic net loss per share of $(0.15) for Q3 2025, compared to earnings of $0.08 per share in Q3 2024 [22]. - Loss from operations for the nine months ended September 30, 2025 was $12.809 million, an improvement of 5% compared to a loss of $13.432 million in the same period of 2024 [28]. Cash Flow and Assets - Cash flows provided by operations were $20.1 million for the quarter, a 169% increase compared to the same quarter last year [9]. - The company had $99 million in cash and cash equivalents with no debt outstanding as of September 30, 2025 [11]. - Cash and cash equivalents increased to $99,132 as of September 30, 2025, compared to $81,633 at December 31, 2024 [26]. - Total current assets decreased to $295,113 as of September 30, 2025, from $335,000 at December 31, 2024 [26]. - Cash and cash equivalents at the end of Q3 2025 were $99.132 million, up from $64.021 million at the end of Q3 2024 [30]. - Net cash provided by operating activities for Q3 2025 was $20.114 million, significantly higher than $7.470 million in Q3 2024 [30]. Staffing and Operations - Homecare Staffing revenue grew more than 29% year-over-year, indicating strong performance in this segment [4]. - Average field contract personnel on a full-time equivalent (FTE) basis decreased to 6,371 from 7,660 in the prior year [7]. - Revenue per FTE per day was $343, down from $373 in the prior year [7]. - Nurse and Allied Staffing revenue per FTE per day decreased to $343 in Q3 2025 from $373 in Q3 2024 [32]. - Days filled for Physician Staffing decreased to 20,695 in Q3 2025 from 24,424 in Q3 2024 [32]. - Corporate overhead for Q3 2025 was $13.656 million, a decrease of 12% from $15.531 million in Q3 2024 [28]. Expenses and Liabilities - Total operating expenses for Q3 2025 were $256,025, down from $312,266 in Q3 2024, reflecting a reduction of 18% [22]. - Total liabilities decreased to $130,089 as of September 30, 2025, compared to $170,292 at December 31, 2024 [26]. - Retained earnings decreased to $206,136 as of September 30, 2025, from $218,059 at December 31, 2024 [26]. - Acquisition and integration-related costs for Q3 2025 were $4,147, compared to $0 in Q3 2024 [24]. - Acquisition and integration-related costs for the nine months ended September 30, 2025 were $12.183 million, compared to $3 million in the same period of 2024 [28]. Mergers and Acquisitions - The pending merger with Aya Healthcare is subject to regulatory approvals and has been extended to December 3, 2025 [12].

Core Insights - Cross Country Healthcare (CCRN) announced a merger at the end of 2024, which is a significant development for the company [1] Group 1: Company Overview - CCRN is focused on finding value in the market, particularly in small-cap opportunities that offer asymmetric upside [1] - The company is interested in generating income through investments, emphasizing high sustainable dividend yields [1] Group 2: Investment Strategy - Key factors for investment consideration include insider buying, high insider ownership, a history of free cash flow growth, and substantial catalysts for turnaround [1] - The company is open to various investment strategies, including high yield debt and selling puts, but is not interested in short positions [1] Group 3: Influences and Philosophy - Major investment influences include renowned investors such as Warren Buffett and Peter Lynch [1] - The preferred investment holding period is long-term, with a focus on matching market returns during bull runs and generating superior returns during market declines [1] Group 4: Educational Background - The company has a Bachelor of Science degree with a major in Economics and Finance, indicating a strong foundational knowledge in financial analysis [1]

Core Viewpoint - The analysis compares Kelly Services (KELYA) and Cross Country Healthcare (CCRN) to determine which stock represents a better value opportunity for investors [1]. Valuation Metrics - KELYA has a forward P/E ratio of 5.78, significantly lower than CCRN's forward P/E of 69.19, indicating KELYA may be undervalued [5]. - KELYA's PEG ratio is 0.44, while CCRN's PEG ratio is 6.92, suggesting KELYA has a more favorable earnings growth outlook relative to its price [5]. - KELYA's P/B ratio is 0.35, compared to CCRN's P/B of 0.92, further supporting KELYA's valuation as more attractive [6]. Zacks Rank and Estimate Revisions - KELYA holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while CCRN has a Zacks Rank of 5 (Strong Sell), suggesting a weaker earnings outlook [3]. - KELYA has experienced stronger estimate revision activity compared to CCRN, reinforcing its position as the superior investment choice for value investors [7]. Value Grades - KELYA has a Value grade of A, while CCRN has a Value grade of C, reflecting KELYA's more favorable valuation metrics [6].