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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' Q3 Earnings: A Mixed Bag

Kelly Services reported revenue of $935 million for Q3 2025, a decrease of 9.9% compared to the same quarter last year, primarily due to lower-than-expected growth in the ETM staffing specialty, education, and select other specialties. The gross profit rate was 20.8%, a decrease of 60 basis points compared to the prior year quarter. The company's EPS came in at $0.18, significantly lower than analyst estimates of $0.42. Despite the decline in revenue, Kelly Services made significant progress in improving its SG&A expense profile, with reported SG&A expenses decreasing by $24.6 million or 11.2%.

Publication Date: Nov -18

📋 Highlights
  • Revenue Decline and Missed Targets:: Q3 2025 revenue fell to $935M (-9.9% YoY), driven by underperformance in ETM staffing (-12.5% gross profit YoY) and education, despite a 90% fill rate in the latter.
  • Cost Efficiency Gains:: SG&A expenses dropped $24.6M (-11.2%), contributing to $94M operating cash flow YTD and $269M liquidity (cash: $30M, credit facilities: $239M).
  • AI and Tech Growth Focus:: 47% of executives struggle to find AI-skilled talent; Kelly plans to leverage AI in recruiting, client portals, and tech integration to capture AI-enabled workforce opportunities.
  • Education Segment Strength:: Subsidy delays caused macro delays, but the 90% fill rate in substitute teacher services remains a competitive advantage for clients.

Operational Highlights

The Education business continued its long-running streak of quarterly growth, achieving a 90% fill rate overall in the quarter for the first time. The company is confident that it will get its fair share of business as decisions come back to market, particularly after a $6 billion grant from the Department of Education was withheld and put under review. The integration of SET and legacy acquisitions is on schedule, with the first big cut over expected at the end of the year.

Valuation and Outlook

With a P/E Ratio of -48.49 and a P/S Ratio of 0.07, the market is pricing in significant challenges for Kelly Services. However, the company's strong cash flow and ability to generate operating cash flow may provide a cushion. Analysts estimate revenue growth of 0.7% for next year, indicating a slow recovery. The company's net debt position is around $90 million, and it is expected to remain stable in the fourth quarter.

Strategic Focus

Kelly Services is focusing on growth, efficiency, and culture to drive its strategic journey. The company aims to position itself as the partner of choice for employers navigating the transition to an AI-enabled workforce. It plans to leverage its capabilities to bring employers a flexible, more scalable solution as they bridge into a more AI-enabled workforce. The company is also committed to building on its strong culture, doubling down on customer centricity, visibility, and accountability.

3. NewsRoom

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Kelly Education Introduces First-of-Its-Kind LEARN Standards for Substitute Teachers and Paraeducators

Nov -17

Source: globenewswire.com

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Most Executives Say Ignoring AI Is a Bigger Threat to Your Career Than the Tech Itself

Nov -12

Source: globenewswire.com

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Kelly Services, Inc. (KELYA) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

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Kelly Services (KELYA) Lags Q3 Earnings and Revenue Estimates

Nov -06

Source: zacks.com

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Kelly Reports Third-Quarter 2025 Earnings

Nov -06

Source: globenewswire.com

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Kelly Announces Participation in Upcoming Investor Conferences

Nov -04

Source: globenewswire.com

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Here Are 3 Staffing Stocks to Consider Despite Industry Woes

Oct -28

Source: zacks.com

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KellyOCG Named MSP and Services Procurement Leader by Everest Group

Oct -28

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
Barrett Business Services

A-Score: 6.0/10

Value: 5.9

Growth: 5.6

Quality: 6.0

Yield: 2.0

Momentum: 7.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Heidrick & Struggles

A-Score: 5.2/10

Value: 4.9

Growth: 4.1

Quality: 5.6

Yield: 3.0

Momentum: 8.0

Volatility: 5.7

1-Year Total Return ->

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Kforce

A-Score: 5.1/10

Value: 7.0

Growth: 4.4

Quality: 6.5

Yield: 7.0

Momentum: 0.0

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Kelly Services

A-Score: 4.3/10

Value: 8.6

Growth: 2.0

Quality: 4.2

Yield: 4.0

Momentum: 1.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
HireRight

A-Score: 4.1/10

Value: 6.4

Growth: 7.1

Quality: 3.4

Yield: 0.0

Momentum: 5.0

Volatility: 2.7

1-Year Total Return ->

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Stock-Card
BGSF

A-Score: 4.0/10

Value: 8.1

Growth: 3.3

Quality: 3.0

Yield: 8.0

Momentum: 0.5

Volatility: 1.3

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

8.5$

Current Price

8.5$

Potential

-0.00%

Expected Cash-Flows