Here Are 3 Staffing Stocks to Consider Amid Industry Woes
Korn Ferry KFY, ManpowerGroup MAN and Kelly KELYA are benefiting from technological developments that improve efficiency.
Industry Description
The Zacks Staffing industry is a diverse sector encompassing companies that offer a comprehensive range of human resources and workforce solutions. These services cover various aspects of personnel management, including employment screening, recruitment services for both temporary and long-term job placements, retirement planning, human capital management, payroll administration, performance evaluation, organizational planning, and financial management. Some firms within this industry provide specialized services, such as staffing and risk consulting, professional staffing, and global business solutions tailored to the needs of small to medium-sized enterprises. They also offer organizational consulting services with a worldwide reach, catering to a vast and varied client base, which includes domestic and international businesses across different sectors and industries.
What's Shaping the Future of the Business Services Industry?
Stable Demand: The industry is mature. The consistency in demand for services has been strong for a while despite challenges in the manufacturing sector. Revenues, income and cash flows are expected to recover to the pre-pandemic levels gradually, allowing most industry players to pay out stable dividends.
Increasing Adoption of Remote Work & Hybrid Models: A significant boost in remote work has been witnessed since the pandemic, and it has made staffing agencies focus on flexible staffing solutions, including hybrid and remote work models. These adaptations assist clients and job-seekers to enjoy a better work-life balance. Given the continued demand for remote work, staffing agencies are anticipated to prioritize and meet evolving workplace preferences efficiently.
Tech-Driven Staffing Solutions on the Rise: The staffing sector is implementing technological advancements to optimize operations, boost efficiency and deliver services at their highest quality. The rising adoption of AI-driven tools and platforms makes attracting, evaluating and onboarding IT talents more effective. The increasing acceptance of social media and Big Data is being witnessed as well. Video-conferencing platforms, such as Microsoft Teams, help in remote communication, and cloud and blockchain technologies improve HR data security. Such technological advancements ensure that the demand for staffing services continues.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Zacks Staffing Firms industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #212. This rank places it in the bottom 14% of 246 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates a continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and current valuation.
Industry & Sector Dips While S&P 500 Rallies
Over the past year, the Zacks Staffing Firms industry has underperformed the S&P 500, with the broader sector experiencing a greater decline than the industry.
The industry has declined 5% against the S&P 500 composite’s growth of 26.5% and the broader sector’s 16.2% dip in the same timeframe.
1-Year Price Performance
Industry's Current Valuation
Based on EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used to value staffing stocks given their high debt levels, the industry is currently trading at 7.34X compared with the S&P 500’s 18.69X and the sector’s 10.31X.
Over the past five years, the industry has traded as high as 10.83X and as low as 4.32X, with the median being 7.27X, as the charts below show.
EV-to-EBITDA
3 Staffing Stocks Poised for Growth
We have presented three stocks that are expected to grow in the near term.
Korn Ferry: This talent-strategy consulting service provider witnessed 5% year-over-year top-line growth in the fourth quarter of fiscal 2026, marking the fifth consecutive quarter of growth. The top-line improvement translated into 13.9% year-over-year growth in net income. Solid profitability and a 60-basis-point (bps) expansion in the net margin highlight a strong operational strategy. Having said that, we can count on the company’s estimated remaining fees under existing contracts valued at $1.9 billion, out of which 57% is expected to be recognized within the next year, providing sufficient recurring revenues.
On a geographical basis, the Americas and the EMEA region reported 7% year-over-year growth each in fee revenues. KFY’s “We Are Korn Ferry” incorporated ecosystem strategy improved business referral rate to 29.1% of consolidated fee revenues, a 320-bps expansion from the historical baseline of nearly 25%.
Korn Ferry’s internal testing across 17 technical workstreams demonstrated that its AI tools are making the company operationally efficient while ensuring protection over its proprietary database of 113 million executive assessments. The company is deploying AI agents within learning and development solutions to assist coaching. AI is identified as a key tool to benefit clients in filling supply and demand imbalances in the global labor market.
KFY currently has a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate for fiscal 2027 earnings per share has moved up from $5.7 to $5.75 over the past 30 days. The shares have gained 7.3% over the past six months.
Price and Consensus: KFY
ManpowerGroup: This workforce solution and service provider witnessed strength in manufacturing across Europe in the first quarter of 2026, backed by aerospace and defense, influencing the Manpower brand positively. Enterprise demand remained high and was the most resilient part of the business, supporting business pipeline expansion.
MAN leverages AI to boost commercial scale, optimize talent experience and build product lines. The company’s proprietary AI system targets high-profitability conversions and has generated nearly $200 million in incremental revenues in France. ManpowerGroup has achieved impressive feats in role fill rates by partnering with Hubert.ai, integrated into the PowerSuite platform, leading to the completion of more than 25,000 AI-backed interviews and reducing early-stage screening times by 67%.
ManpowerGroup’s PowerSuite operates in 90% of its global operations, which the company has utilized to launch a strategic transformation program expected to deliver $200 million in permanent run-rate cost savings by 2028. Moreover, to optimize the cost baseline, MAN has redesigned and centralized back-office operations into a Global Business Services center.
ManpowerGroup currently carries a Zacks Rank of 3 (Hold). The Zacks Consensus Estimate for 2026 earnings per share has been unchanged at $3.66 over the past 30 days. The company’s shares have gained 28% over the past six months.
Price and Consensus: MAN
Kelly: This workforce solutions provider paved a path for expansion by implementing a major managed service provider program with a pioneering oil and gas company across North America. The company holds a strong pipeline to convert large global opportunities seeking total talent management solutions.
KELYA’s segmental performance in the first quarter of 2026 was impressive, with growth across each talent solutions specialty. Sequential improvement was registered in the telecom specialty, backed by outsized demand from data centers. A similar trend was seen on the life sciences and engineering front. Despite near-term pressure, the education segment defended key renewals and is expanding its therapy offerings into new and existing clients.
The company held a current ratio of 1.59 at the end of the first quarter of 2026, higher than the industry average of 1.39. A current ratio of more than 1 bodes well with investors as it signals effective payment of short-term obligations. This strong current ratio is bolstered by a cash chest of $29 million against zero current debt. A robust liquidity position puts KELYA at the brink of seizing opportunistic market expansion.
KELYA currently carries a Zacks Rank of 3. The Zacks Consensus Estimate for 2026 earnings has been unchanged at $1.01 per share over the past 30 days. The company’s shares have gained 49.5% over the past six months.
Price and Consensus: KELYA
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).
