The stock has been a solid grower over the years.
It’s that time of the quarter that earnings reports slow to a crawl, which puts more focus on the few companies that actually do report earnings.
That certainly seems to be the case for consulting and search firm Korn Ferry (NYSE:), which saw its stock price skyrocket some 16% on Wednesday on a solid, but not spectacular quarterly report.
The firm saw revenue increase 3% in its fiscal fourth quarter to $712 million, which topped estimates of $691 million.
It had net income of $64.2 million, of $1.21 per share, which was down 1.5% from the previous quarter. But adjusted net income was up 7% to $70.1 million, or $1.32 per share. That was better than Wall Street estimates of $1.26 per share.
“Even amid the ever-changing global economic and political dynamics, we continue to deliver on our financial and strategic objectives, just as we have over the past several years. Our results reinforce the premise of Korn Ferry’s diversification strategy and our continued momentum,” Gary Burnison, CEO, Korn Ferry, said.
Executive Search Drives Revenue
Korn Ferry makes the vast majority of its revenue through fees for its search and consulting services.
While overall consulting fees were down 7% year-over-year to $169 million, Korn Ferry got a big lift from executive search. In the quarter, executive search fee revenue rose 14% to $227 million. Also, recruitment process outsourcing (RPO) generated a 4.3% increase in revenue to $93.3 million.
In addition, while consulting revenue was down, remaining revenue under contract increased 8% to $368 million. This represents fee revenue from signed contracts that has not yet been recognized.
Korn Ferry also posted its outlook for the first fiscal quarter, which was generally slightly better than analysts anticipated. The firm is calling for free revenue of between $675 million and $695 million, which would be down from Q4, but is better at the midpoint than estimates.
Also, earnings are targeted at a range of $1.16 to $1.24 per share, which is slightly higher at the midpoint than the $1.20 per share expectations.
Is Korn Ferry Stock a Buy?
Korn Ferry stock didn’t really get any upgrades after earnings. Analysts target a median share price of $78.50 per share, which would be up about 8% from the current price.
In this time of tariffs and uncertainty, Korn Ferry is a solid and cheap, which is why investors may be flocking to it. It currently has a P/E ratio of 14, with a forward P/E of 12.
The stock is up 9% YTD and has been a solid, reliable performer over the years with a 19% average annualized return over the past 5 years and an 8% average annualized return over the past 10 years.
Experts say that 2025 should be a strong year, generally, for executive search and consulting, due to an increase in M&A and other factors.
Korn Ferry stock is not going to the moon, but it remains a solid option for its steady growth, history of performance, low valuation, and decent outlook. That’s even after Wednesday’s 16% price surge.