It's been a sad week for Kforce Inc. (NYSE:KFRC), who've watched their investment drop 12% to US$38.62 in the week since the company reported its first-quarter result. It looks like the results were a bit of a negative overall. While revenues of US$330m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.3% to hit US$0.45 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus, from the five analysts covering Kforce, is for revenues of US$1.33b in 2025. This implies a perceptible 4.1% reduction in Kforce's revenue over the past 12 months. Statutory earnings per share are expected to fall 18% to US$2.21 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.37b and earnings per share (EPS) of US$2.57 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
Check out our latest analysis for Kforce
It'll come as no surprise then, to learn that the analysts have cut their price target 17% to US$50.25. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Kforce analyst has a price target of US$57.00 per share, while the most pessimistic values it at US$40.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Kforce shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.4% by the end of 2025. This indicates a significant reduction from annual growth of 0.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.0% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Kforce is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Kforce. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Kforce's future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Kforce going out to 2027, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Kforce that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.