Here Are 3 Staffing Stocks to Consider Despite Industry Challenges

The Staffing Firms industry is anticipated to recover to its pre-pandemic levels gradually, allowing companies to pay out regular dividends. The frequent adoption of remote work and hybrid models, backed by top-notch technological advancements, will drive the demand for staffing agencies. Resources Connection RGP, Kforce KFRC and HireQuest, Inc. HQI are benefiting from technological developments that improve efficiency.

Industry Description

The Zacks Staffing industry is a diverse sector encompassing companies that offer a comprehensive range of human resources and workforce solutions. These services cover various aspects of personnel management, including employment screening, recruitment services for both temporary and long-term job placements, retirement planning, human capital management, payroll administration, performance evaluation, organizational planning and financial management. Some firms within this industry provide specialized services, such as staffing and risk consulting, professional staffing and global business solutions tailored to the needs of small to medium-sized enterprises. They also offer organizational consulting services with a worldwide reach, catering to a wide and varied client base, which includes domestic and international businesses across different sectors and industries.

What's Shaping the Future of the Business Services Industry?

Stable Demand: The industry is mature. The consistency in demand for services has been strong for a while despite challenges in the manufacturing sector. Revenues, income and cash flows are expected to recover to the pre-pandemic levels gradually, allowing most industry players to pay out stable dividends.

Increasing Adoption of Remote Work & Hybrid Models: A significant boost in remote work has been witnessed since the pandemic, and it has made staffing agencies focus on flexible staffing solutions, including hybrid and remote work models. These adaptations assist clients and job-seekers to enjoy a better work-life balance. Given the continued demand for remote work, staffing agencies are anticipated to prioritize and meet evolving workplace preferences efficiently.

Tech-Driven Staffing Solutions on the Rise: The staffing sector is implementing technological advancements to optimize operations, boost efficiency and deliver services at their highest quality. The rising adoption of AI-driven tools and platforms makes attracting, evaluating and onboarding IT talents more effective. The increasing acceptance of social media and Big Data is being witnessed as well. Video-conferencing platforms, such as Zoom and Microsoft Teams, help in remote communication, and cloud and blockchain technologies improve HR data security. Such technological advancements ensure that the demand for staffing services continues.

Zacks Industry Rank Indicates Sluggish Near-Term Prospects

The Zacks Staffing Firms industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #227. This rank places it in the bottom 7% of 244 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates a continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and current valuation.

Industry Lags Sector & S&P 500

The Zacks Staffing Firms industry has underperformed the S&P 500 and the broader sector over the past year.

The industry has declined 39.2% against the S&P 500 composite’s growth of 18.9% and the broader sector’s 12.7% dip in the same timeframe.

One-Year Price Performance

Industry's Current Valuation

On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing staffing stocks because of their high debt levels, the industry is currently trading at 5.76X compared with the S&P 500’s 18.98X and the sector’s 10.7X.

Over the past five years, the industry has traded as high as 13.6X and as low as 4.95X, with the median being 7.75X, as the charts below show.

EV-to-EBITDA

3 Staffing Stocks Poised for Growth

We have presented three stocks that are expected to grow in the near term.

Resources Connection: This company offers an array of consulting and business initiative support services.

During the second quarter of fiscal 2026, RGP witnessed favorable international growth led by markets in Europe, India, Japan and the Philippines. While a year-over-year dip was registered in On-Demand, it showed signs of sequential stabilization, backed by higher average bill rates. On the Outsourced Services front, revenues remained steady year over year with gross margins improving from the year-ago quarter.

RGP was selected by a large tech firm as a preferred consulting provider, expanding its role from On-Demand Talent into Advisory Services on mission-critical work. Furthermore, during the recent earnings call, the COO stated that combining Reference Point’s capability with the RGP’s consulting platform and leadership will improve collaboration, streamline go-to-market execution and build focus on CFO advisory and digital transformation. 

The company held $90 million in cash and equivalents as of Nov. 30, 2025, against zero current debt, highlighting a strong balance sheet position. RGP’s current ratio hovers at 2.64 compared with the industry’s 1.22. A current ratio exceeding one hints at a strong short-term debt coverage capability, an important trait required for further investments.

RGP currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its 2025 earnings per share has been revised up 14.3% in the past 60 days. The shares have gained 6% over the past three months.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Kforce: It provides staffing services and solutions in the US. The company exceeded the board's expectations during the third quarter of 2025 with a top line of $332.6 million and 63 cents in EPS. While revenues from the technology business dipped 1.1% sequentially, Finance and Accounting registered 7% sequential growth in its revenues despite the macro headwinds.

It is impressive how the company managed to keep the average bill rate in its Technology segment at nearly $90 per hour over the past three years amid the turbulent market. This steadiness is derived from the growing mix of consulting-oriented engagements, which commands higher bill rates and strong margin profiles.

KFRC holds a strong balance sheet position with conservative debt levels. It holds zero current debt, which strengthens its liquidity position, further solidified by a current ratio of 1.88, higher than the industry’s 1.22. While it had $65 million in long-term debt as of Sept. 30, 2025, it was nearly 33% of the total capital and lower than the industry’s 39%. It highlights a robust solvency position, which is a significant green flag for investors.

KFRC currently has a Zacks Rank of 3. The Zacks Consensus Estimate for 2025 earnings has remained unchanged at $2.13 per share over the past 60 days. The shares have gained 21.1% over the past three months.

HireQuest: This company offers various staffing solutions in the US., including direct-dispatch, commercial staffing, executive search and many more. During the third quarter of 2025, system-wide sales grew 6.1% year over year sequentially.

The CEO stated that the key to the company’s profitability in soft markets is its flexible and robust franchise model, which stands true during the third quarter of 2025, as evidenced by a net income after tax of $2.3 million against the year-ago quarter’s $2.2 million net loss. Furthermore, adjusted net income soared from $2.8 million during the third quarter of 2024 to $3.4 million during the recently reported quarter.

HQI’s liquidity position is strong, as evidenced by its current ratio of 2.4 during the third quarter of 2025, higher than the preceding quarter’s 2.23 and the year-ago quarter’s 1.68. A current ratio exceeding one reveals that the company can easily pay off its short-term obligations.

HQI currently carries a Zacks Rank of 3. The Zacks Consensus Estimate for 2025 earnings has remained unchanged at 64 cents per share over the past 60 days. The shares have gained 29.6% over the past three months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 
Resources Connection, Inc. (RGP): Free Stock Analysis Report
 
Kforce, Inc. (KFRC): Free Stock Analysis Report
 
HireQuest, Inc. (HQI): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research