Korn Ferry (KFY): Assessing Valuation Following Strong Earnings, Dividend Announcement, and Updated Outlook

Korn Ferry (KFY) just delivered its latest earnings update, and it is bound to draw in investors weighing their next move. The company reported growth in both revenue and net income for the quarter ended July, notching up USD 715.54 million in revenue compared to last year's USD 682.76 million, and net income hitting USD 66.64 million. Alongside these results, Korn Ferry announced a dividend and wrapped up another round of share buybacks, highlighting a sense of confidence from the board. Investors also received a fresh batch of forward guidance, setting expectations for next quarter’s fee revenue and earnings per share. All this comes at a time when Korn Ferry stock has seen steady momentum. After gaining nearly 9% so far this year, the shares are up just over 2% for the past twelve months, offering a healthy contrast to some of the volatility in the sector. Over three and five years, returns are especially striking, suggesting long-term holders have done well. Recent moves, including share repurchases and continued dividends, fit with a pattern of management signaling stability even as the business faces ongoing industry pressures. The question, then, is whether the strong quarterly update and shareholder returns mean there is still upside from here, or if the market has already priced in the best of Korn Ferry’s outlook.

Most Popular Narrative: 12.8% Undervalued

According to the most widely followed narrative, Korn Ferry is trading at a discount to its estimated fair value, suggesting potential room for upside if projections play out as expected.

“Korn Ferry has secured significant transformation engagements with major global companies, indicating a strong demand for their services in strategic transformation and workforce transformation, which can drive future revenue growth. The company's strategy of diversifying and expanding into larger addressable markets with a wide range of organizational and talent solutions is expected to enhance revenue predictability and sustainability, potentially improving net margins.”

Curious what’s powering this bullish outlook? The narrative relies on a mix of ambitious revenue, margin, and earnings projections that could reshape how investors view the stock. There is a hidden formula behind this fair value: it involves big assumptions and shifting market dynamics, crafted for anyone seeking the real numbers behind Korn Ferry’s price target.

Result: Fair Value of $83.75 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unpredictable macroeconomic conditions or delays in converting new projects into revenue could challenge this upbeat outlook for Korn Ferry.

Find out about the key risks to this Korn Ferry narrative.

Another View: What Does a Cash Flow Model Say?

While the analyst consensus highlights upside based on earnings projections, our SWS DCF model paints an even more optimistic picture. This suggests Korn Ferry could be trading further below its intrinsic value. Could the true opportunity be even greater?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Korn Ferry for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Korn Ferry Narrative

If you have a different angle or want to test your own ideas, you can craft a Korn Ferry narrative using our tools in just minutes. Do it your way

A great starting point for your Korn Ferry research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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