Korn Ferry: Consulting Growth Encouraging, But Executive Search Performance Needs To Rebound

Core Viewpoint - Korn Ferry has experienced significant stock growth of over 35% in the past year, prompting an analysis of its potential for further upside [1] Financial Performance - Total revenue for the three months ended April 30, 2024, was $699.923 million, down 5.2% compared to the prior year quarter [6] - The Consulting segment showed growth of 3.9%, with revenue reaching $182.177 million for the same period [2][6] - The Executive Search segment experienced a decline in revenue, with a decrease of 6.5% to $198.703 million [2][6] - Adjusted diluted earnings per share increased to $1.26 from $1.01 in the prior year quarter, but decreased from $4.94 to $4.28 on a year-end basis [2] Segment Analysis - The Consulting segment is currently the second-highest in fee revenue and has shown consistent growth across all quarters in 2024 [20][22] - The Executive Search segment has faced challenges, attributed to a decline in engagements due to adverse economic conditions, with revenues down 7.9% year-over-year [2][23] - The Professional Search & Interim segment saw a significant decline of 14.9% in the most recent quarter [2] Market Position and Outlook - Korn Ferry was ranked by Forbes as the top executive recruiting firm in the U.S. for seven out of the last eight years, indicating strong market positioning [23] - The company’s quick ratio improved from 1.49 to 1.63, suggesting sufficient liquidity to meet current liabilities [10][22] - The forward P/E ratio for Korn Ferry is similar to its peers, indicating that the stock is fairly valued [11][24] Future Growth Prospects - The growth in the Consulting segment is encouraging, but a rebound in the Executive Search segment is necessary for overall revenue growth [23][25] - Current labor market conditions, including low job openings and reduced hiring activity, are impacting demand for Executive Search services [23]