Investment Thesis
Korn Ferry demonstrates strong fundamental financial health with excellent balance sheet strength (0.20x debt/equity), robust free cash flow generation ($324.3M), and solid interest coverage. However, earnings growth (+1.2% YoY) significantly lags revenue growth (+6.4% YoY), indicating margin compression that warrants caution in this cyclical employment services sector.
Strengths
- Fortress balance sheet with minimal leverage and $1.1B cash position
- Strong free cash flow generation ($324.3M) with 11% FCF margin
- Exceptional interest coverage ratio of 218.6x provides significant financial flexibility
- Healthy liquidity metrics (1.94x current ratio) and operational efficiency
Risks
- Operating margin compression despite revenue growth signals deteriorating pricing power or rising costs
- Earnings growth significantly underperforming revenue growth suggests operational challenges
- Cyclical exposure in employment services sector creates vulnerability in economic downturns
- Disconnect between 6.4% revenue growth and 1.2% net income growth requires investigation
Key Metrics to Watch
- Gross margin trends and operating expense ratios to diagnose margin compression cause
- Segment-level profitability and revenue mix shifts
- Free cash flow conversion and capital allocation efficiency
Financial Metrics
Revenue
2.9B
Net Income
277.4M
EPS (Diluted)
$5.22
Free Cash Flow
324.3M
Total Assets
4.1B
Cash
1.1B
Profitability Ratios
Gross Margin
N/A
Operating Margin
12.8%
Net Margin
9.4%
ROE
14.1%
ROA
6.8%
FCF Margin
11.0%
Balance Sheet & Liquidity
Current Ratio
1.94x
Quick Ratio
1.94x
Debt/Equity
0.20x
Debt/Assets
51.3%
Interest Coverage
218.64x
Long-term Debt
398.6M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-07-28T06:03:10.504518 |
Data as of: 2026-04-30 |
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