A rarely covered enterprise, Kforce (US:KFRC) – which provides professional staffing services and solutions for the U.S. workforce – typically operates in the shadows of its larger rivals, such as Robert Half International (US:RHI). Nevertheless, the combination of unusual trading activity in the derivatives market and cynical economic tailwinds may help lift KFRC stock from its current hiccups.
On surface, Kforce appears out of its element. Although KFRC stock popped up 4.54% since the beginning of this year, recent trading sessions have been far-less auspicious for the staffing agency. For example, in the trailing one-month period, shares gave up more than 9% of equity value. Recently, following the conclusion of the May 2 session, Kforce was off 4% against the prior day.
Management is slated to announce first-quarter results on May 8. Data compiled by Fintel shows an average estimate of earnings per share of 84 cents drawn from six analysts. KFRC stock investors have been surprised in each of the last 12 quarterly reports, including eight positive surprises. The Fintel analyst revenue consensus is for $416 million and average EBITDA of $28 million for the period ending March 31, 2023.
Fresh Fears
Fundamentally, the failure of First Republic (US:FRC) reignited fears about the stability of the U.S. regional banking sector. As well, the anxieties focused on the Federal Reserve and the impact the banking crisis may have on future monetary policy. Throughout 2022, the central bank aggressively hiked rates to combat soaring inflation, which then sparked concerns about an incoming recession. Naturally, those concerns are again at the forefront of consumer worries.
In addition, Kforce specializes in staffing services for prospective jobseekers in the finance, accounting and technology roles. Of course, the latter sector suffered disproportionately in terms of layoffs. Therefore, at a cursory glance, KFRC stock appears as an unnecessarily risky market idea.
Eyes on Options
Intriguingly, though, Kforce represented a positive highlight last month on Fintel’s screener for unusual stock options volume. Following the close of the April 18 session, call volume hit 160 contracts against an open interest reading of 48. On the other side of the equation, put volume was zero contracts against open interest of 337.
Notably, the average call volume for KFRC stock is usually zero and the average put volume is one contract. By logical deduction, the smart money may be anticipating some big moves for Kforce. Enticingly, Fintel-compiled data shows KFRC’s put/call ratio sits at 0.41, indicating bullish sentiment overall.
As Fintel contributor Will Ashworth pointed out, current recession fears have contributed to a deflationary impact on the hydrocarbon energy market. However, the current economic framework differs from prior bearish cycles because of the grand work-from-home experiment. For corporate employees, the easiest way to better ensure surviving a layoff is to show up physically and be counted.
Naturally, the return-to-the-office pivot also means the return of the drudgery of the nine-to-five. Eventually, then, workers may be more incentivized to seek greener pastures, which potentially may translate to higher demand for Kforce’s white-collar services.
This article originally appeared on Fintel
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