Here Are 3 Staffing Stocks to Consider Despite Industry Headwinds

Industry Overview - The Zacks Staffing industry encompasses a wide range of human resources and workforce solutions, including recruitment, payroll administration, and organizational consulting services tailored for various sectors [2] - The industry is currently facing challenges due to a contraction in the manufacturing sector, which negatively impacts the demand for temporary workers [3] Current Trends - The staffing industry is expected to recover to pre-pandemic revenues, income, and cash flows despite the ongoing contraction in manufacturing [3] - There is an increased adoption of remote work and hybrid models, prompting staffing agencies to prioritize flexible staffing solutions to meet evolving workplace preferences [4] - Technology is increasingly being utilized in the staffing sector to enhance operations, with AI-driven tools and platforms improving the efficiency of attracting and onboarding talent [5] Market Performance - The Zacks Staffing Firms industry has underperformed compared to the broader sector and the S&P 500, declining 32% over the past year, while the S&P 500 grew by 15.9% [8] - The industry currently trades at an EV-to-EBITDA ratio of 6.53X, significantly lower than the S&P 500's 18.03X and the sector's 11.37X [11] Company Highlights - Korn Ferry (KFY): This firm is leveraging its broad array of solutions and large-scale client engagements, with a focus on technology and AI investments. KFY's digital subscription and license business is enhancing revenue stability [14][15] KFY has a Zacks Rank 3 and a consensus estimate for its 2025 bottom line at $5.16, reflecting an 11% increase over the past 60 days [17] - RCM Technologies (RCMT): RCMT is transitioning into an innovative company with a strong growth narrative in its healthcare segment, particularly in K-12 behavioral health. The company is also expanding in life sciences and engineering, supported by multi-year contracts [20][22] RCMT holds a Zacks Rank 3 with a consensus estimate for its 2025 bottom line at $2.2 [22] - Heidrick & Struggles International (HSII): HSII focuses on value creation through effective leadership placement, supported by a diversified revenue model and zero debt. The company has a Zacks Rank 3 and a consensus estimate for 2025 EPS at $2.86 [25][27]