KFY

Korn Ferry trades at 15.4x trailing earnings and 1.3x sales with a fortress balance sheet — $1.01B cash against just $398M long-term debt and $1.87B equity (L/E of 1.07x). FY2025 was a margin recovery story: operating income jumped 62.6% to $346M and net income rose 45.5% to $246M despite revenue slipping 1.2% to $2.76B. Operating cash flow of $364M (up 28.3%) easily funds the $62.5M capex, $88.8M of buybacks and $83.6M of dividends, with room to spare. ROE of 13.2% is decent but not exceptional for an asset-light consulting model.

The rub is the top line. Revenue has now declined two years running from the FY2023 $2.86B peak, and the MD&A itself flags the structural overhangs: 'changes in demand for our services as a result of automation,' 'inflation, trade wars, global slowdowns, or recessions,' and the dependence on 'utilization and billing rates of our consultants' (a classic operating-leverage warning that cuts both ways). Korn Ferry leans hard on its 'Foundational Assets' — 10 billion data points and IP — but management explicitly notes 'limited protection of our intellectual property' and the need to 'enhance and develop new technology, including artificial intelligence,' which is the existential question for a talent-advisory firm in 2026.