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1. Company Snapshot

1.a. Company Description

Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries.The company operates through five segments: Professional & Industrial; Science, Engineering & Technology; Education; Outsourcing & Consulting; and International.The Professional & Industrial segment delivers staffing, outcome-based, and direct-hire services in the areas of office, professional, light industrial, and contact center specialties.


The Science, Engineering & Technology segment offers staffing, outcome-based, and direct-hire services in the areas of science and clinical research, engineering, information technology, and telecommunications specialties.The Education segment provides staffing and executive search services to early childhood, and higher education markets.The Outsourcing & Consulting segment offers recruitment process outsourcing (RPO), payroll process outsourcing, and talent advisory services, as well as managed services.


The International segment provides staffing, RPO, and direct-hire services in Europe and Mexico.The company serves customers in the United States, Canada, Mexico, Puerto Rico, France, Switzerland, Portugal, Russia, the United Kingdom, Italy, Germany, Ireland, rest of Europe, and the Asia-Pacific region.Kelly Services, Inc.


was founded in 1946 and is headquartered in Troy, Michigan.

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1.b. Last Insights on KELYA

Kelly Services' recent performance was negatively impacted by its Q3 earnings miss, with quarterly earnings of $0.18 per share, falling short of the Zacks Consensus Estimate of $0.42 per share. Additionally, KLP Kapitalforvaltning AS decreased its position in the company by 37.3%, selling 6,600 shares. The company also announced a 2% reduction in its corporate workforce, citing the need to meet evolving client needs. These developments, coupled with a challenging industry landscape, have raised concerns about the company's short-term prospects.

1.c. Company Highlights

2. Kelly Services' Q4 Results: Revenue Decline and Margin Pressure

Kelly Services reported revenue of $1,100,000,000 for the fourth quarter of 2025, a decrease of 11.9% versus Q4 of last year, or down 3.9% on an underlying basis excluding discrete impacts. The company's adjusted EBITDA margin was under pressure, despite substantial SG&A reductions. For the full year, revenue totaled $4,250,000,000, a decrease of 1.9% overall. Adjusted earnings per share was $1.26, and adjusted EBITDA was $21,000,000 with an adjusted EBITDA margin of 2%. Actual EPS for Q4 came out at $0.16, below estimates of $0.45.

Publication Date: Mar -02

📋 Highlights
  • Revenue Decline in FY2025:: Total revenue fell to $4.25B, a 1.9% decrease, driven by ETM and SET segments with margin pressures despite SG&A reductions.
  • Q4 Cash Flow and Liquidity:: Generated $122.6M operating cash flow in Q4, with $288M total liquidity ($33M cash + $255M credit facilities).
  • 2026 Outlook:: Projects 11–13% Q1 revenue decline YoY, improving to mid-single-digit annual decline, with EBITDA margin expansion in H2 via AI/automation.
  • AI and Technology Investments:: Deployed Grace Boost and AI recruiting solutions, targeting productivity gains and EBITDA margin improvements, particularly in SET and Science segments.
  • Strategic Priorities:: Focus on organic growth through new initiatives (e.g., $255M credit facilities flexibility), enterprise AI scaling, and a new Chief Growth Officer to drive market expansion.

Operational Performance

The company's operational performance was mixed, with Education and SET segments showing revenue growth, while ETM saw stable sequential revenue performance. The SET business experienced worsening underlying revenue trends over the last three quarters, although the telecom segment saw modest growth, and Life Sciences showed positive momentum.

Guidance and Outlook

Looking ahead to 2026, the company expects revenue to decline between 11-13% year over year in Q1, with adjusted EBITDA margin of approximately 1.5%. However, the company expects to see relative improvement in year-over-year performance each successive quarter, resulting in modest revenue growth in the second half of the year and a roughly mid-single-digit decline on a full year basis. Analysts estimate next year's revenue growth at 4.6%.

Valuation and Metrics

The company's valuation metrics indicate a low valuation, with a P/E Ratio of -1.33, P/B Ratio of 0.35, and P/S Ratio of 0.08. The EV/EBITDA ratio is -62.78, suggesting that the company's enterprise value is not justified by its EBITDA. The Dividend Yield is 3.09%, which may be attractive to income investors. The company's ROE and ROIC are negative, indicating poor profitability.

Strategic Initiatives

The company is focused on growth, driven by the formation of a growth office and the identification of organic growth drivers in each business. Kelly is also investing in AI and technology modernization, with a focus on enhancing the customer and talent experience. The company's unique AI solutions are expected to drive productivity improvements and accelerate growth.

Impact of Hunt Companies' Involvement

The agreement with Hunt Companies to purchase a controlling stake of Class B common stock is not expected to impact Kelly's business, client relationships, or strategic initiatives. The governance protections in the agreement align with all shareholders and provide a benefit for both Class A and Class B shares.

3. NewsRoom

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Kelly Services, Inc. (KELYA) Q4 2025 Earnings Call Transcript

Feb -12

Source: seekingalpha.com

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Kelly Services (KELYA) Q4 Earnings Miss Estimates

Feb -12

Source: zacks.com

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Kelly Reports Fourth-Quarter and Full-Year 2025 Earnings

Feb -12

Source: globenewswire.com

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Kelly Appoints Patrick McCall as Chief Growth Officer

Feb -11

Source: globenewswire.com

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Kelly Announces Fourth-Quarter and Full-Year 2025 Conference Call

Feb -05

Source: globenewswire.com

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Baltimore City Public Schools Chief Human Capital Officer Emily L. Nielson Receives Distinguished Service Award

Feb -04

Source: globenewswire.com

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Kelly Services Announces Agreement with Hunt Equity Opportunities and Board Appointments

Jan -30

Source: globenewswire.com

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Kelly Services Adopts Stockholder Rights Plan

Jan -12

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.34%)

6. Segments

Professional & Industrial

Expected Growth: 8.15%

Kelly Services' Professional & Industrial segment growth of 8.15% is driven by increasing demand for skilled labor in industries such as technology, healthcare, and manufacturing. Additionally, the company's strategic expansion into high-growth markets, investments in digital platforms, and focus on providing specialized workforce solutions are contributing to its growth momentum.

Science, Engineering & Technology

Expected Growth: 8.37%

Kelly Services' Science, Engineering & Technology segment growth of 8.37% is driven by increasing demand for skilled professionals in emerging technologies such as AI, cybersecurity, and data analytics. Additionally, the need for companies to innovate and stay competitive in their respective markets, coupled with a shortage of STEM talent, fuels growth in this segment.

International

Expected Growth: 7.43%

Kelly Services, Inc.'s international segment growth of 7.43% is driven by increasing demand for temporary and permanent staffing solutions, expansion into emerging markets, and strategic acquisitions. Additionally, a growing need for workforce flexibility and talent management solutions, particularly in the IT and healthcare sectors, contributes to this growth.

Education

Expected Growth: 9.33%

Kelly Services' 9.33% growth in Education is driven by increasing demand for online learning platforms, rising need for skilled workforce, and growing adoption of technology in educational institutions. Additionally, the company's strategic partnerships and expansion into new markets have contributed to its growth.

Outsourcing & Consulting

Expected Growth: 8.9%

Kelly Services' 8.9% growth in Outsourcing & Consulting is driven by increasing demand for workforce flexibility, cost savings, and access to specialized skills. Additionally, the rise of the gig economy, digital transformation, and the need for businesses to adapt to changing market conditions are contributing to the segment's growth.

Intersegment

Expected Growth: 7.43%

Kelly Services' 7.43% intersegment growth is driven by increasing demand for temporary and permanent staffing solutions, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on digital transformation, talent management, and outsourcing services has contributed to its growth. Furthermore, the rise of the gig economy and changing workforce dynamics have also fueled demand for Kelly Services' offerings.

7. Detailed Products

Office Services

Kelly Services provides temporary, temporary-to-permanent, and direct-hire office professionals in areas such as administration, customer service, and data entry.

Industrial Services

Kelly Services provides skilled and semi-skilled industrial workers, including assemblers, warehouse workers, and maintenance technicians, to support manufacturing and logistics operations.

Technical Services

Kelly Services provides IT professionals, engineers, and scientists to support projects and operations in industries such as technology, healthcare, and aerospace.

Professional Services

Kelly Services provides experienced professionals in areas such as finance, accounting, marketing, and human resources to support business operations.

Education Services

Kelly Services provides educational staffing services, including substitute teachers, paraprofessionals, and other support staff, to support K-12 and higher education institutions.

Science Services

Kelly Services provides scientists, researchers, and laboratory professionals to support research and development projects in industries such as pharmaceuticals, biotechnology, and environmental science.

8. Kelly Services, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Kelly Services, Inc. faces moderate threat from substitutes due to the presence of alternative staffing agencies and online job platforms.

Bargaining Power Of Customers

Customers have limited bargaining power due to Kelly Services, Inc.'s strong brand reputation and diversified client base.

Bargaining Power Of Suppliers

Suppliers have moderate bargaining power due to the presence of multiple staffing agencies and the ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants is high due to the relatively low barriers to entry in the staffing industry and the increasing trend of online job platforms.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of established players and the increasing competition from online job platforms.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 3.93%
Debt Cost 4.27%
Equity Weight 96.07%
Equity Cost 9.93%
WACC 9.71%
Leverage 4.09%

11. Quality Control: Kelly Services, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Heidrick & Struggles

A-Score: 5.4/10

Value: 5.3

Growth: 4.1

Quality: 5.5

Yield: 3.0

Momentum: 8.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Barrett Business Services

A-Score: 4.9/10

Value: 4.7

Growth: 5.6

Quality: 6.2

Yield: 2.0

Momentum: 3.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Kforce

A-Score: 4.6/10

Value: 6.4

Growth: 4.4

Quality: 6.6

Yield: 6.0

Momentum: 0.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
BGSF

A-Score: 4.5/10

Value: 8.0

Growth: 3.3

Quality: 3.1

Yield: 8.0

Momentum: 3.0

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
HireRight

A-Score: 4.3/10

Value: 6.5

Growth: 7.1

Quality: 3.4

Yield: 0.0

Momentum: 6.0

Volatility: 2.7

1-Year Total Return ->

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Stock-Card
Kelly Services

A-Score: 4.2/10

Value: 9.0

Growth: 2.0

Quality: 4.1

Yield: 4.0

Momentum: 1.0

Volatility: 5.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

9.37$

Current Price

9.37$

Potential

-0.00%

Expected Cash-Flows