Is Korn/Ferry International (KFY) a Strong Buy Ahead of Q1 2026 Earnings?

Korn/Ferry International (KFY) has long been a bellwether for the global talent and consulting sector, but its recent performance raises critical questions for investors ahead of its Q1 2026 earnings report on September 9, 2025. With a mix of stable revenue, margin expansion, and strategic acquisitions, the company appears to be navigating a challenging macroeconomic environment with disciplined cost management. However, the question remains: Is KFY a strong buy for those seeking exposure to this sector?

Earnings Momentum: Stability Amid Macroeconomic Headwinds

KFY’s Q2 and Q3 2025 results underscore a company focused on preserving profitability despite a 4% year-over-year decline in Q2 fee revenue to $674.4 million and flat year-over-year performance in Q3 at $668.7 million [1]. While these figures reflect a slowdown in growth, the adjusted EBITDA margin expanded significantly, rising to 17.4% in Q2 and 17.1% in Q3, driven by cost discipline and improved consultant productivity [1]. This margin resilience is a key strength, as it suggests KFY can maintain profitability even in a low-growth environment.

The acquisition of Trilogy International further bolsters KFY’s long-term prospects. By expanding its interim professional services in high-growth regions like EMEA and North America, the company is positioning itself to capitalize on evolving client needs [1]. Analysts project Q1 2026 earnings per share (EPS) of $1.24, aligning with KFY’s guidance of $1.16–$1.24 and indicating confidence in sustaining this momentum [3]. However, investors should monitor whether the company can translate these strategic moves into revenue growth in the coming quarters.

Dividend Attractiveness: A 2.6% Yield with Shareholder-Friendly Policies

KFY’s dividend yield of 2.59% as of 2025 is a compelling draw for income-focused investors [4]. The company’s commitment to returning capital is evident in its recent actions: $32.6 million in share repurchases during Q2 2025 and a $0.48 per share quarterly dividend [1]. This consistency in payouts, even amid revenue declines, signals management’s confidence in the business’s cash flow stability.

However, the sustainability of this yield depends on KFY’s ability to maintain its EBITDA margins and avoid overextending its balance sheet. With a market capitalization of $3.88 billion and a price-to-earnings ratio of 16.06, the stock appears reasonably valued, but investors should assess whether the dividend remains secure if macroeconomic conditions worsen [4].

Institutional Confidence: A Mixed Picture of Ownership Trends

Institutional ownership of KFY remains robust at 98.82%, reflecting enduring confidence in the company’s long-term strategy [2]. Notably, Keeley Teton Advisors LLC increased its stake by 29.7% in Q3 2025, while Edgestream Partners L.P. and Bank of America Corp DE also boosted holdings [4]. These moves suggest that savvy institutional investors view KFY as a defensive play in a volatile market.

Yet, the data also reveals some caution. Thrivent Financial for Lutherans reduced its holdings by 33.1%, and State Street Corp made only a modest 0.2% increase [1]. This mixed activity highlights the delicate balance between optimism about KFY’s margin discipline and skepticism about its growth potential. For now, the high institutional ownership percentage indicates that the broader market remains largely supportive.

Conclusion: A Cautious “Strong Buy” with Conditions

KFY’s combination of stable earnings, a resilient dividend, and strategic acquisitions makes it an attractive candidate for investors seeking exposure to the talent and consulting sector. The company’s Q1 2026 guidance and institutional ownership trends further reinforce its appeal. However, the lack of significant revenue growth and macroeconomic uncertainties warrant caution.

For KFY to justify a “strong buy” rating, investors should monitor two key metrics: (1) whether the Trilogy acquisition drives measurable revenue expansion in 2026 and (2) if the company can sustain its EBITDA margins amid potential inflationary pressures. If these conditions hold, KFY could deliver both income and capital appreciation. Otherwise, its appeal may remain limited to defensive, income-focused portfolios.

Source:
[1] Korn Ferry Announces Second Quarter Fiscal 2025 Results [https://ir.kornferry.com/news-events/press-releases/detail/691/korn-ferry-announces-second-quarter-fiscal-2025-results-of-operations]
[2] Korn Ferry Stock - Stock Price, Institutional Ownership [https://fintel.io/so/us/kfy]
[3] Korn Ferry Provides Earnings Guidance for the First Quarter of 2026 [https://in.marketscreener.com/quote/stock/KORN-FERRY-13257/news/Korn-Ferry-Provides-Earnings-Guidance-for-the-First-Quarter-of-2026-50277357/]
[4] Korn/Ferry International (NYSE:KFY) - Stock Analysis [https://simplywall.st/stocks/us/commercial-services/nyse-kfy/korn-ferry]