KELYA · Kelly Services
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $15.97
Note written ·
Price against the kill line
14.2% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $15.97, on record since 11 November 2026. The shares are down 14.4% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $15.97, which would put the shares back above their 50-day average and show them leading despite the November outlook cut. A raised fourth-quarter outlook from the company would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Industrials
Quarter to 27 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 927
- Revenue, change on a year (%)
- −0.8
- Gross margin (%)
- 21.0
- Operating margin (%)
- 0.1
- Free cash flow, four quarters ($M)
- −8.1
- Net cash, cash less debt ($M)
- −100
- Enterprise value to sales (×)
- 0.1
- Enterprise value to operating income (×)
- 52.8
All filed numbers
What Kelly Services reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 927 | −0.8 | 21.0 | 0.1 |
| first filed | 1,038 | −5.8 | 20.4 | 1.6 |
| first filed | 1,041 | −10.7 | 18.9 | −0.5 |
| first filed | 1,049 | −11.9 | 18.8 | −0.1 |
| first filed | 935 | −9.9 | 20.7 | −10.9 |
| first filed | 1,102 | +4.2 | 20.5 | 2.0 |
| Pre-tax income ($M) | −0.5 |
| Net income ($M) four quarters: −125 | −1.7 |
| Diluted shares, change on a year (%) against the quarter to 28 September 2025 | −1.7 |
| Operating cash flow ($M) | −2.1 |
| Capital spending ($M) | 6.0 |
| Free cash flow ($M) | −8.1 |
| Cash and short-term investments ($M) | 22.2 |
| Debt ($M) long-term debt | 123 |
| Net cash, cash less debt ($M) | −100 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 1,300 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 980 |
| Market value ($M) | 476 |
| Enterprise value, market value plus net debt ($M) | 576 |
| Enterprise value to sales (×) | 0.1 |
| Enterprise value to operating income (×) | 52.8 |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 0.5 |
| Free-cash-flow yield (%) | −1.7 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.1% of shares outstanding sold short, 4.0 days of average trading to cover, +3.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $327K | $294Kand 1 trade without a stated price |
The thesis
Kelly Services' shares are more likely to lag the S&P 500 over the next three months. The company cut its fourth-quarter outlook on 5 November 2026, and the fourth-quarter report, expected around February 2027, settles whether the 3.8%–4.0% adjusted EBITDA margin target is reachable. EBITDA is earnings before interest, taxes, depreciation and amortization.
Third-quarter revenue was $927.2 million, down 0.8% from a year earlier and inside the guided range of $916.3–935.0 million. Underlying revenue grew about 2.3% against guidance of 1%–2%. Adjusted EBITDA was $21.3 million at a 2.3% margin (Form 8-K, 5 November 2026).
The fourth-quarter outlook is revenue flat to up 1% and a margin of 3.8%–4.0%. Finviz coverage of the company's earlier outlook (5 November 2026) describes mid-to-upper single-digit revenue growth and a margin of about 4%. The revenue guide fell by several points while the margin range moved only slightly.
The market has already marked the shares down. They closed at $13.80 on 12 November 2026, 22.3% below the 52-week high of $17.75 set on 6 August 2026, and the three-month change is −13.7% (adjusted daily closes).
Bullish and bearish views on Kelly Services, Inc.
The bull case on Kelly Services, Inc. (KELYA), in brief: third quarter met every guided number. The bear case: the fourth-quarter outlook was cut.
Bull case
- Third quarter met every guided number. Reported revenue, underlying growth and margin landed in or above guided ranges (Form 8-K, 5 November 2026). Adjusted EBITDA rose 29.1% to $21.3 million.
- Margins expanded from a year earlier. The 2.3% adjusted EBITDA margin was up 50 basis points, and the gross profit rate rose to 21.0% from 20.8% (Form 8-K, 5 November 2026).
- Enterprise Talent Management is growing. Segment revenue was $496.1 million, up 2.4% and up 7.7% on an underlying basis (Form 8-K, 5 November 2026).
- Debt is modest. Long-term debt was $122.5 million and debt-to-capital 11.1% at quarter end, 27 September 2026 (Form 8-K, 5 November 2026).
- The shares hold above the long-term average. The last close of $13.80 on 12 November 2026 is above the 200-day average of closes of $12.64 (adjusted daily closes).
Bear case
- The fourth-quarter outlook was cut. Revenue guidance is flat to up 1%, and the company says the extra fiscal week adds about 3 points to fourth-quarter revenue growth (Form 8-K, 5 November 2026).
- Earnings missed estimates. Adjusted earnings per share (EPS) were $0.07 against a $0.10 estimate, and sales of $927.2 million trailed a $929.333 million estimate (company news, 5 November 2026). Adjusted EPS was $0.17 a year earlier.
- The margin must rise sharply. The target of 3.8%–4.0% compares with 2.3% in the third quarter, and the company says the extra week weighs on adjusted EBITDA (Form 8-K, 5 November 2026).
- Two segments are shrinking. Education revenue fell 6.4% to $134.2 million, and Science, Engineering & Technology fell 2.0% to $302.1 million (Form 8-K, 5 November 2026).
- Net income was negative. The GAAP net loss was $1.7 million, or $0.05 per share, in the third quarter. Full-year revenue is guided to a mid-single-digit decline (Form 8-K, 5 November 2026).
Price setup
The shares closed at $13.80 on 12 November 2026. Between 5 November 2026 and 12 November 2026 the daily closes ranged from $13.62 (9 November 2026) to $14.05 (5 November 2026).
The 50-day average of closes is $15.91 and the 200-day average is $12.64, both as of 12 November 2026 (adjusted daily closes). The shares sit below the first and above the second. The 52-week closing low is $8.08, set on 20 November 2025.
SEC Form 4 filings show only tax withholding by executives on vested stock: 27,716 shares by Chief Financial Officer Troy Anderson at $15.57 on 15 October 2026, and 15,998 shares by Chief Executive Officer Christopher Layden at $16.45 on 15 September 2026. The filings list no open-market insider sales. The Class A float is small, and Barrington Research and Noble Financial are the only firms that publish estimates, so single-session moves can be large.
Catalysts ahead
- ~4 December 2026 (est.): BLS November 2026 Employment Situation, including the temporary-help services series. Shows whether temporary-help hiring is stabilising after September's 10,900 drop, the demand backdrop for Kelly's fourth-quarter volumes.
- ~February 2027 (est.): Fourth-quarter and full-year 2026 report. Tests the 3.8%–4.0% adjusted EBITDA margin and flat-to-up-1% revenue guidance that the company set on 5 November 2026.
What would change the view
A daily close above $15.97, which would put the shares back above their 50-day average and show them leading despite the November outlook cut. A raised fourth-quarter outlook from the company would also show the shares leading.
What it trades with
Kelly trades with US staffing and temporary-help demand, tracked monthly through the Bureau of Labor Statistics (BLS) temporary-help services series and total nonfarm payrolls. It is also exposed to K-12 school staffing through Education and to technology and engineering hiring through Science, Engineering & Technology.
The dual-class structure and thin Class A trading make the shares behave more like a small-cap stock than a staffing-sector index constituent.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $927.2 million, down 0.8% from a year earlier; underlying revenue grew about 2.3%. Guidance was $916.3–935.0 million reported and 1%–2% underlying. Kelly Services third-quarter 2026 earnings release (Form 8-K) · as of
- Third-quarter adjusted EBITDA was $21.3 million, up 29.1%, a 2.3% margin up 50 basis points. GAAP net loss was $1.7 million, or $0.05 per share; adjusted EPS was $0.07 versus $0.17 a year earlier. Kelly Services third-quarter 2026 earnings release (Form 8-K) · as of
- Adjusted EPS of $0.07 missed a $0.10 estimate, and sales of $927.2 million missed a $929.333 million estimate. Company news headline, 5 November 2026 · as of
- Fourth-quarter 2026 outlook: revenue flat to up 1% from a year earlier and adjusted EBITDA margin of 3.8%–4.0%, up 180–200 basis points; full-year outlook is a mid-single-digit revenue decline and a 2.6%–2.7% margin. Kelly Services third-quarter 2026 earnings release (Form 8-K) · as of
- Third-quarter segment revenue: Enterprise Talent Management $496.1 million (up 2.4%, underlying up 7.7%); Science, Engineering & Technology $302.1 million (down 2.0%); Education $134.2 million (down 6.4%). Kelly Services third-quarter 2026 earnings release (Form 8-K) · as of
- Cash was $22.2 million and long-term debt $122.5 million at quarter end; debt-to-capital was 11.1%. Kelly Services third-quarter 2026 earnings release (Form 8-K) · as of
- The shares closed at $13.80 on 12 November 2026, 22.3% below the 52-week high of $17.75 set on 6 August 2026; the 50-day average of closes was $15.91 and the 200-day average $12.64. Split-adjusted daily closes · as of
- The chief financial officer had 27,716 shares withheld for tax at $15.57 on 15 October 2026; the chief executive had 15,998 shares withheld for tax at $16.45 on 15 September 2026. SEC Form 4 filings, 16 October 2026 and 16 September 2026 · as of
Sources