Korn Ferry (KFY) | Investment Case

1. Company Snapshot

1.a. Company Description

Korn Ferry, together with its subsidiaries, provides organizational consulting services worldwide.It operates through four segments: Consulting, Digital, Executive Search, and Recruitment Process Outsourcing (RPO) & Professional Search.The company provides executive search services to recruit board level, chief executive, other senior executive, and general management talent of organizations.

It also offers organizational strategy, assessment and succession, leadership and professional development, and total reward services.In addition, the company provides RPO, business project, professional search, and outsource recruiting solutions.Further, the company offers tech-enabled solutions that identify structures, roles, capabilities, and behaviors to drive businesses.

It serves public and private companies, and middle market and emerging growth companies, as well as government and non-profit organizations.The company was formerly known as Korn/Ferry International and changed its name to Korn Ferry in January 2019.Korn Ferry was founded in 1969 and is based in Los Angeles, California.

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1.b. Last Insights on KFY

Korn Ferry's recent performance was driven by strong Q4 earnings and revenue beat, beating estimates and showing accelerating new business growth despite economic uncertainty and sector divergences. The company's diversified revenue streams, robust contract backlog, and cost management have insulated it from industry headwinds and supported margin expansion. Additionally, the company's proprietary data, diversified business segments, and global reach drive sustainable revenue and profit growth, even amid labor market headwinds. Korn Ferry's strong balance sheet and consistent capital returns support a potential 4.9% yield, with dividends and buybacks well-covered by free cash flow.

1.c. Company Highlights

Last Price	67.5
Change Percentage	-3.68%
Open	69.01
Previous Close	70.08
Market Cap ( Millions)	3523
Volume	233763
Year High	78.5
Year Low	59.23
M A 50	67.13
M A 200	69.12

FCF Yield	7.74%
Dividend Yield	2.84%
ROE	13.97%
Debt / Equity	26.58%
Net Debt / EBIDTA	-53.28%
Price To Book	1.79
Price Earnings Ratio	13.31
Price To FCF	12.93
Price To sales	1.24
EV / EBITDA	7.13

2. Korn Ferry's Strong Q2 FY26 Earnings: A Testament to its "We Are Korn Ferry" Strategy

Korn Ferry's second-quarter fiscal year 2026 performance was outstanding, with consolidated fee revenue growing 7% year-over-year to $722 million. Adjusted EBITDA grew $8 million or 7% year-over-year to $125 million, and adjusted EBITDA margin was strong at 17.3%. Adjusted diluted earnings per share grew $0.12 or 10% year-over-year to $1.33, beating analyst estimates of $1.31. The company's financial performance demonstrates the effectiveness of its "We Are Korn Ferry" strategy, which focuses on integrating multiple solutions to create enduring client partnerships.

Publication Date: Dec -20

                                    📋 Highlights
                                    Revenue & Profit Growth::
                                                Consolidated fee revenue rose 7% YoY to $722M; adjusted EBITDA up 7% to $125M ($128M total) with 17.3% margin; EPS growth of 10% to $1.33.
Strategic Referrals & Pipeline::
                                                Business referrals hit 27.6% of revenue (+250 bps YoY) and estimated remaining fees surged 20% YoY to $1.84B.
Segment Strength::
                                                Executive Search revenue grew 10%; Professional Search/interim revenue jumped 17% YoY.
Shareholder Returns & Capex::
                                                $70M returned via buybacks/dividends; $43M invested in capital expenditures.
3Q26 Guidance::
                                                Revenue forecasted at $680–694M; EBITDA margin 17.2–17.4%; EPS $1.19–1.25, reflecting stable seasonality.

                                

Business Referrals and Remaining Fees Under Existing Contracts

Business referrals grew to 27.6% of consolidated fee revenue, up approximately 250 basis points year-over-year and quarter sequentially. Estimated remaining fees under existing contracts increased to $1.84 billion, up 20% year-over-year. This growth in referrals and remaining fees is a testament to the company's ability to create long-term client relationships and drive repeat business.

Segment Performance and Outlook

Executive Search fee revenue remained strong, growing 10%, and Professional Search and interim fee revenue was up 17% year-over-year. For the third quarter of fiscal '26, the company expects fee revenue to range from $680 million to $694 million, adjusted EBITDA margin to range from approximately 17.2% to 17.4%, and consolidated adjusted diluted earnings per share to range from $1.19 to $1.25. Analysts estimate next year's revenue growth at 5.4%, which is slightly lower than the current year's growth rate.

Valuation Metrics

With a P/E Ratio of 13.46, P/B Ratio of 1.81, and EV/EBITDA of 7.13, Korn Ferry's valuation multiples suggest that the market is pricing in moderate growth expectations. The company's ROE of 13.97% and ROIC of 8.95% indicate a strong ability to generate returns on equity and invested capital. The dividend yield of 2.81% provides a relatively stable source of return for investors.

Growth Opportunities and Challenges

Gary Burnison noted that there's substantial opportunity for growth in higher-value engagements, citing a shift from small transactions to larger, more transformational deals. The company is also investing in its Talent Suite product, which brings together all data and assets into one repository, allowing for easier access and analytics. With a focus on licensing arrangements, Korn Ferry expects growth in its digital solutions.

3. NewsRoom

Korn/Ferry International $KFY Shares Purchased by Universal Beteiligungs und Servicegesellschaft mbH

Jan -31

Source: defenseworld.net

Korn Ferry Named as Founding Partner of LA28 Olympic and Paralympic Games

Jan -27

Source: businesswire.com

Fortune en Korn Ferry onthullen Fortunes World's Most Admired Companies™ in 2026-lijst

Jan -22

Source: prnewswire.com

Fortune and Korn Ferry Reveal the Fortune World's Most Admired Companies™ 2026 List

Jan -21

Source: prnewswire.com

Fortune and Korn Ferry Reveal the Fortune World's Most Admired Companies™ 2026 List

Jan -21

Source: prnewswire.com

Korn Ferry Launches Talent Suite, Embedding People Science into Every Talent Decision

Jan -13

Source: businesswire.com

Voya Investment Management LLC Sells 19,832 Shares of Korn/Ferry International $KFY

Jan -02

Source: defenseworld.net

Reviewing Resources Connection (NASDAQ:RGP) and Korn/Ferry International (NYSE:KFY)

Dec -27

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Consulting

Expected Growth: 3%

Korn Ferry's consulting segment growth is driven by increasing demand for human capital advisory services, expansion into new markets, and strategic acquisitions. The company's expertise in organizational design, talent management, and leadership development resonates with clients seeking to navigate complex business transformations, driving revenue growth.

Executive Search - North America

Expected Growth: 3%

Korn Ferry's Executive Search - North America segment growth is driven by increasing demand for leadership talent in a tight labor market, fueled by low unemployment rates and rising retirements among baby boomers. Additionally, the segment benefits from the growing need for digital transformation and diversity, equity, and inclusion expertise among North American companies.

Professional Search & Interim

Expected Growth: 3%

Korn Ferry's Professional Search & Interim segment growth is driven by increasing demand for specialized talent, rising need for flexible workforce solutions, and growing adoption of digital recruitment platforms. Additionally, the segment benefits from the company's strong brand reputation, global presence, and strategic partnerships, enabling it to capitalize on emerging trends in the human capital management industry.

Recruitment Process Outsourcing

Expected Growth: 3%

The 3% growth in Recruitment Process Outsourcing (RPO) from Korn Ferry is driven by increasing demand for cost-effective and efficient hiring processes, growing need for employers to improve candidate experience, and rising adoption of digital transformation in HR functions. Additionally, Korn Ferry's expertise in talent management and its global presence contribute to its market share growth.

Digital

Expected Growth: 3%

Digital from Korn Ferry's 3% growth is driven by increasing demand for digital transformation, rising adoption of AI and cloud-based solutions, and growing need for organizations to enhance their digital capabilities to stay competitive. Additionally, the segment benefits from Korn Ferry's strong brand reputation and expanding presence in high-growth markets.

Executive Search - EMEA

Expected Growth: 3%

Korn Ferry's Executive Search - EMEA segment growth is driven by increasing demand for leadership talent in a rapidly changing business environment. Growing need for digital transformation, diversity and inclusion, and leadership development in EMEA region are key factors. Additionally, the segment benefits from Korn Ferry's strong brand reputation, extensive network, and expertise in identifying and assessing top talent.

Executive Search - Asia Pacific

Expected Growth: 3%

Korn Ferry's Executive Search - Asia Pacific segment growth is driven by increasing demand for leadership talent in the region, fueled by economic growth, urbanization, and digital transformation. Additionally, the rise of Asian conglomerates and multinational corporations expanding into the region is creating a shortage of skilled executives, further boosting demand for Korn Ferry's services.

Executive Search - Latin America

Expected Growth: 3%

Korn Ferry's Executive Search in Latin America is driven by a growing demand for leadership talent in key industries such as finance, technology, and healthcare. Economic growth, urbanization, and increasing foreign investment in the region are fueling the need for skilled executives. Additionally, the rise of family-owned businesses and startups in Latin America is creating opportunities for executive search firms to provide leadership solutions.

7. Detailed Products

Executive Search

Korn Ferry's Executive Search service helps clients find and recruit top talent for senior-level positions, including CEOs, CFOs, and other executive roles.

Talent Strategy

Korn Ferry's Talent Strategy service helps clients develop a comprehensive talent strategy aligned with their business goals, including talent acquisition, development, and retention.

Leadership Development

Korn Ferry's Leadership Development service provides customized leadership development programs to help clients build the skills and competencies of their leaders.

Assessment and Succession

Korn Ferry's Assessment and Succession service helps clients identify, assess, and develop future leaders, ensuring a strong succession pipeline.

Organizational Strategy

Korn Ferry's Organizational Strategy service helps clients design and implement organizational structures, roles, and processes to drive business performance.

Reward and Benefits

Korn Ferry's Reward and Benefits service helps clients design and implement compensation and benefits programs that attract, retain, and motivate top talent.

Culture Transformation

Korn Ferry's Culture Transformation service helps clients assess, design, and implement cultural transformations to drive business performance and growth.

8. Korn Ferry's Porter Forces

Forces Ranking

Threat Of Substitutes

Korn Ferry's services are specialized and require a high level of expertise, making it difficult for substitutes to emerge.

Bargaining Power Of Customers

Korn Ferry's customers are largely dependent on the company's services, giving them limited bargaining power.

Bargaining Power Of Suppliers

Korn Ferry has a diverse supplier base, reducing the bargaining power of individual suppliers.

Threat Of New Entrants

The human capital consulting industry has high barriers to entry, making it difficult for new entrants to compete with Korn Ferry.

Intensity Of Rivalry

The human capital consulting industry is highly competitive, with several established players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	25.40%
Debt Cost	6.40%
Equity Weight	74.60%
Equity Cost	11.33%
WACC	10.07%
Leverage	34.05%

11. Quality Control: Korn Ferry passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Mueller Industries

A-Score: 6.4/10

Value: 4.3

Growth: 7.1

Quality: 7.9

Yield: 2.0

Momentum: 9.0

Volatility: 8.0

1-Year Total Return ->

Korn Ferry

A-Score: 5.8/10

Value: 6.6

Growth: 5.7

Quality: 6.3

Yield: 4.0

Momentum: 3.5

Volatility: 9.0

1-Year Total Return ->

Worthington Industries

A-Score: 5.3/10

Value: 3.9

Growth: 3.1

Quality: 5.9

Yield: 4.0

Momentum: 8.5

Volatility: 6.3

1-Year Total Return ->

Robert Half

A-Score: 5.0/10

Value: 6.0

Growth: 3.2

Quality: 6.0

Yield: 8.0

Momentum: 0.0

Volatility: 6.7

1-Year Total Return ->

ManpowerGroup

A-Score: 4.9/10

Value: 9.0

Growth: 2.9

Quality: 3.6

Yield: 8.0

Momentum: 0.0

Volatility: 5.7

1-Year Total Return ->

Insperity

A-Score: 4.3/10

Value: 2.8

Growth: 6.9

Quality: 3.9

Yield: 8.0

Momentum: 0.0

Volatility: 4.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

1.21%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.07%

Korn Ferry - US5006432000

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on KFY

1.c. Company Highlights

Higher Growth

Less Volatile

Average Quality

Earnings Beats

Revenues Miss

Better Quality

Medium Volatility

Revenues Beats

Stable Momentum

Earnings Miss

Average Growth

Average Yield

Fairly Valued

2. Korn Ferry's Strong Q2 FY26 Earnings: A Testament to its "We Are Korn Ferry" Strategy

Business Referrals and Remaining Fees Under Existing Contracts

Segment Performance and Outlook

Valuation Metrics

Growth Opportunities and Challenges

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Consulting

Expected Growth: 3%

Executive Search - North America

Expected Growth: 3%

Professional Search & Interim

Expected Growth: 3%

Recruitment Process Outsourcing

Expected Growth: 3%

Digital

Expected Growth: 3%

Executive Search - EMEA

Expected Growth: 3%

Executive Search - Asia Pacific

Expected Growth: 3%

Executive Search - Latin America

Expected Growth: 3%

7. Detailed Products

Executive Search

Talent Strategy

Leadership Development

Assessment and Succession

Organizational Strategy

Reward and Benefits

Culture Transformation

8. Korn Ferry's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Korn Ferry passed 6 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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

12.e Scoring ^Insights

12.f DCF ^BETA