Robert Half Inc. RHI has advanced 62.1% in the past three months as sentiment improved alongside sequential progress in Talent Solutions and firmer contract bill rates.
The rally now faces a tougher test. Labor demand remains cautious, while RHI's forward earnings valuation stands above its sub-industry and five-year median.
RHI's Staffing Recovery Gains Traction
Talent Solutions delivered its third consecutive quarter of sequential revenue growth on an adjusted basis in the second quarter of 2026. Segment revenues totaled $865.4 million, down 1% year over year.
Permanent Placement Talent Solutions revenues rose 2.9% to $118 million, returning to year-over-year growth. Contract Talent Solutions revenues declined 1.6% to $747.4 million, showing that the recovery remains uneven.
Robert Half's Pricing Helps Defend Margins
Contract Talent Solutions bill rates increased 2.3% year over year in the second quarter after rising 2.6% in the first quarter. The pricing trend helped offset weaker activity.
Contract Talent Solutions gross margin held at 39.1%, unchanged from a year earlier. Overall Talent Solutions gross margin improved to 47.4% from 47.1%, giving Robert Half some margin support while volumes remained under pressure.
RHI's Cash Rebound Strengthens the Case
Free cash flow recovered to $102 million in the second quarter from negative $121 million in the first quarter. Operating cash flow reached $109 million after a $112 million use of cash in the preceding quarter.
                                 Image Source: Zacks Investment Research
                                 Image Source: Zacks Investment Research
Robert Half ended June with about $325 million in cash and $821 million in net receivables. It had no outstanding borrowings under its $100 million revolving credit facility, preserving financial flexibility during a gradual staffing recovery.
Robert Half Still Faces a Soft Labor Market
Contract Talent Solutions hours worked declined 2.8% year over year in the second quarter, while permanent placement volumes fell 2.6%. RHI's 2026 revenues are expected to decline 1.1%, underscoring the drag from cautious hiring.
Kelly Services, Inc. KELYA, another specialty talent solutions provider, reported second-quarter 2026 revenue of $1.0 billion and said its year-over-year revenue decline improved by about 500 basis points from the prior quarter.
Korn Ferry KFY reported 7% year-over-year fee revenue growth in its fiscal fourth quarter of 2026, including 14% growth in Professional Search & Interim. The contrast shows that demand trends can vary materially across staffing and talent-services businesses.
RHI's Valuation Leaves Less Room for Error
RHI trades at 24.9X forward 12-month EPS, above 17.6X for its Zacks sub-industry. The current multiple also sits above its five-year median of 18.8X, though below the five-year high of 28.8X.
                                 Image Source: Zacks Investment Research
That premium raises the bar for execution. Further upside would be easier to support if the sequential staffing recovery broadens into sustained revenue and earnings improvement.
RHI's Signals Still Call for Caution
RHI's operating recovery is gaining traction, but soft hiring volumes and a richer valuation leave less room for disappointment after the three-month surge.
The stock carries a Zacks Rank #4 (Sell), with a Value Score of B, Growth Score of C, Momentum Score of F and VGM Score of C.
The #4 Rank reflects unfavorable earnings estimate revisions, while the Value Score is the strongest individual style signal. The weak Momentum Score and C-rated Growth and VGM Scores keep the near-term picture cautious.
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