Korn Ferry Wants to Monetize Its Intellectual Capital
Shareholders of Korn Ferry International (NYSE: KFY) must tire of its chronic market underperformance. Over the last 12 months, shares of the executive search and organizational consulting specialist have lost 4% of their value, even as the S&P 500 has gained 25%. Stretch this look back to a 10-year period, and the disparity persists: Korn Ferry's cumulative 158% return trails the S&P 500 index's performance by 40 percentage points.
There isn't a concrete reason behind Korn Ferry's inability to match the broader market's gains. The company regularly throws off decent top-line improvement -- revenue has increased by an average of 17% over each of the last five years. And it's reasonably profitable, although operating margin has bounced between 6% and 12% over the same period (operating margin is near the top of this range at present).
It's not hard to see a more qualitative rationale for the lack of investor enthusiasm, however, as the executive search industry always seems to have a cloud hanging over it. Executive search organizations are sensitive to macroeconomic uncertainty: When the economy slows and managers stop hiring, such companies experience a fairly immediate impact.
Source Fool.com
