KFRC
KFRC
Accumulate 2026-03-27
Model
DCF
Price at Report
$28.70
Base IV
$44.69
Bear IV
$22.64
Bull IV
$80.70
Entry Zone: 24-41 · Sell Above: 69
Bore Family Office
Valuation Report — Kforce Inc. (KFRC) • March 27, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 11.00% • Current Price: $28.70
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Kforce Inc. is a technology-focused professional staffing and solutions firm, providing temporary and permanent IT talent to enterprise clients across the US. Following its 2022-2023 exit from Finance & Accounting staffing, KFRC is now a pure-play technology staffing company. The firm places software developers, data engineers, cloud architects, cybersecurity analysts, and project managers with Fortune 500 and mid-market clients.
KFRC has faced significant headwinds since 2022: the post-COVID IT hiring boom reversed, clients slowed discretionary tech spending, and AI automation fears dampened temporary staffing demand. Revenue declined from $1.71B (FY2022) to $1.33B (FY2025, -22%), and EBITDA fell from $121M to $56M (-54%). The stock has dropped 41% from its 52-week high. However, analysts project a recovery in 2026-2027 as enterprise IT budgets normalize and AI implementation creates demand for specialized tech talent that augments — rather than replaces — staffing needs.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Technology | $1,250M | 94% | -5.0% | — | IT staffing & solutions; core business |
| Finance & Accounting | $79M | 6% | -40.0% | — | Wind-down in progress; exiting segment |
| Blended Growth Rate | — | 100% | -7.1% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 18.2% | ≥12% strong |
| FCF Margin | 3.5% | <5% weak |
| Debt / EBITDA | 1.3x | ≤2x conservative |
| Revenue Trend | Declining 3yr | 3-year directional trend |
| FCF Margin Trend | Contracting | Directional margin trajectory |
| Analyst Revisions | Downward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $1,580 | $1,711 | $1,532 | $1,405 | $1,329 |
| Rev YoY Growth | — | +8.3% | -10.5% | -8.3% | -5.4% |
| Gross Margin | 28.9% | 29.3% | 27.9% | 27.4% | 27.2% |
| EBITDA ($M) | $111 | $121 | $92 | $76 | $56 |
| EBITDA Margin | 7.0% | 7.1% | 6.0% | 5.4% | 4.2% |
| Operating Income ($M) | $107 | $117 | $87 | $70 | $50 |
| Operating Margin | 6.8% | 6.8% | 5.7% | 5.0% | 3.8% |
| Net Income ($M) | $75 | $75 | $61 | $50 | $35 |
| Net Margin | 4.7% | 4.4% | 4.0% | 3.6% | 2.6% |
| EPS (diluted) | $3.54 | $3.68 | $3.13 | $2.68 | $1.96 |
| Free Cash Flow ($M) | $66 | $83 | $84 | $79 | $47 |
| Annual DPS | $0.920 | $1.200 | $1.380 | $1.490 | $1.570 |
| Total Debt ($M) | $106 | $30 | $45 | $36 | $70 |
📈 DCF Scenarios
$23
🔴 Bear
$45
📊 Base
$81
🚀 Bull
$28.70
Current Price
$38
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.0% | 2.0% | 2.0% | 12.50% | $23 | ▼21.1% |
| 📊 Base | 12.0% | 4.0% | 2.5% | 11.00% | $45 | ▲55.7% |
| 🚀 Bull | 20.0% | 6.0% | 3.0% | 10.00% | $81 | ▲181.2% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 3.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.05B | $0.04B | $0.04B |
| Year 2 | Stage 1 | $0.05B | $0.04B | $0.08B |
| Year 3 | Stage 1 | $0.05B | $0.04B | $0.12B |
| Year 4 | Stage 1 | $0.05B | $0.03B | $0.15B |
| Year 5 | Stage 1 | $0.05B | $0.03B | $0.18B |
| Year 6 | Stage 2 | $0.06B | $0.03B | $0.21B |
| Year 7 | Stage 2 | $0.06B | $0.02B | $0.23B |
| Year 8 | Stage 2 | $0.06B | $0.02B | $0.26B |
| Year 9 | Stage 2 | $0.06B | $0.02B | $0.28B |
| Year 10 | Stage 2 | $0.06B | $0.02B | $0.30B |
| Terminal | — | TV=$0.6B | PV(TV)=$0.2B (38% of EV) | EV=$0.5B |
| Intrinsic Value | — | — | EV $0.5B − Net Debt → Equity / Shares | $23 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (12.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $0.6B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.2B). Enterprise Value = PV of FCFs ($0.3B) + PV of TV ($0.2B) = $0.5B. Subtracting net debt gives equity value of $0.4B, divided by shares outstanding = $23 per share.
Base Scenario
Stage 1: 12.0% | Stage 2: 4.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.05B | $0.05B | $0.05B |
| Year 2 | Stage 1 | $0.06B | $0.05B | $0.10B |
| Year 3 | Stage 1 | $0.07B | $0.05B | $0.14B |
| Year 4 | Stage 1 | $0.07B | $0.05B | $0.19B |
| Year 5 | Stage 1 | $0.08B | $0.05B | $0.24B |
| Year 6 | Stage 2 | $0.09B | $0.05B | $0.29B |
| Year 7 | Stage 2 | $0.09B | $0.04B | $0.33B |
| Year 8 | Stage 2 | $0.09B | $0.04B | $0.37B |
| Year 9 | Stage 2 | $0.10B | $0.04B | $0.41B |
| Year 10 | Stage 2 | $0.10B | $0.04B | $0.44B |
| Terminal | — | TV=$1.2B | PV(TV)=$0.4B (49% of EV) | EV=$0.9B |
| Intrinsic Value | — | — | EV $0.9B − Net Debt → Equity / Shares | $45 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (11.00%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $1.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.4B). Enterprise Value = PV of FCFs ($0.4B) + PV of TV ($0.4B) = $0.9B. Subtracting net debt gives equity value of $0.8B, divided by shares outstanding = $45 per share.
Bull Scenario
Stage 1: 20.0% | Stage 2: 6.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.06B | $0.05B | $0.05B |
| Year 2 | Stage 1 | $0.07B | $0.06B | $0.11B |
| Year 3 | Stage 1 | $0.08B | $0.06B | $0.17B |
| Year 4 | Stage 1 | $0.10B | $0.07B | $0.23B |
| Year 5 | Stage 1 | $0.12B | $0.07B | $0.31B |
| Year 6 | Stage 2 | $0.12B | $0.07B | $0.38B |
| Year 7 | Stage 2 | $0.13B | $0.07B | $0.44B |
| Year 8 | Stage 2 | $0.14B | $0.06B | $0.51B |
| Year 9 | Stage 2 | $0.15B | $0.06B | $0.57B |
| Year 10 | Stage 2 | $0.16B | $0.06B | $0.63B |
| Terminal | — | TV=$2.3B | PV(TV)=$0.9B (58% of EV) | EV=$1.5B |
| Intrinsic Value | — | — | EV $1.5B − Net Debt → Equity / Shares | $81 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (10.00%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $2.3B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.9B). Enterprise Value = PV of FCFs ($0.6B) + PV of TV ($0.9B) = $1.5B. Subtracting net debt gives equity value of $1.5B, divided by shares outstanding = $81 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 9.0% | $55 | $58 | $61 | $64 | $68 |
| 9.5% | $51 | $53 | $56 | $59 | $62 |
| 10.0% | $48 | $50 | $52 | $54 | $56 |
| 10.5% | $45 | $46 | $48 | $50 | $52 |
| 11.0% | $42 | $43 | $45 | $46 | $48 |
| 11.5% | $39 | $41 | $42 | $43 | $45 |
| 12.0% | $37 | $38 | $39 | $40 | $42 |
| 12.5% | $35 | $36 | $37 | $38 | $39 |
| 13.0% | $33 | $34 | $35 | $36 | $37 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.600 |
| Current Yield | 5.57% |
| Consecutive Growth Years | 8 |
| 1-yr DPS CAGR | +2.6% |
| 3-yr DPS CAGR | +10.0% |
| 5-yr DPS CAGR | +14.5% |
| 10-yr DPS CAGR | +12.0% |
| Payout Ratio (DPS/EPS) | 81.6% ⚠️ |
| FCF Payout Ratio | 58.5% |
| Sustainability Verdict | Watch |
KFRC's dividend is under pressure. The EPS payout ratio has risen to 82% as earnings declined, though FCF coverage remains adequate at 1.7× ($47M FCF vs $27.5M dividends). The real risk is if revenue continues declining — at the current trajectory, FCF could compress further, threatening the 8-year growth streak. Management has maintained increases through the downturn, signaling confidence in a 2026 recovery. Verdict: Watch — safe for now, but one more year of earnings decline would put the dividend at risk.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $3.54 | — | — | — | Actual |
| 2022 | $3.68 | — | — | — | Actual |
| 2023 | $3.13 | — | — | — | Actual |
| 2024 | $2.68 | — | — | — | Actual |
| 2025 | $1.96 | — | — | — | Actual |
| 2026 | $2.03 | $2.26 | $2.47 | 8 | Estimate |
| 2027 | $2.53 | $2.79 | $3.08 | 8 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $1.6B | — | — | — | Actual |
| 2022 | $1.7B | — | — | — | Actual |
| 2023 | $1.5B | — | — | — | Actual |
| 2024 | $1.4B | — | — | — | Actual |
| 2025 | $1.3B | — | — | — | Actual |
| 2026 | $1.3B | $1.4B | $1.4B | 8 | Estimate |
| 2027 | $1.4B | $1.4B | $1.5B | 8 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Joshua Chan | UBS | Hold | $39 | +35.9% |
| Tobey Sommer | Truist Securities | Hold | $38 | +32.4% |
💡 Investment Thesis
- Deep cyclical trough offers entry opportunity: KFRC is down 41% from its 52-week high with revenue and earnings at multi-year lows. Staffing is cyclical — the trough is the time to buy, not sell. Historical pattern: KFRC recovered 80%+ after prior downturns (2009, 2016, 2020).
- 5.6% dividend yield + 5.5% buyback yield = 11% total shareholder yield: Management is aggressively returning capital even during the downturn. 8 consecutive years of dividend increases. Share count has declined from 21M to 18M since 2021 (−14%).
- AI implementation tailwind: Contrary to fears that AI eliminates IT staffing demand, enterprise AI deployment requires specialized talent — cloud migration, data engineering, MLOps, and cybersecurity. KFRC is well-positioned as a pure-play tech staffing provider.
- Pure-play tech focus: The FA segment exit sharpens the story. Technology staffing has higher margins and better secular growth than generalist staffing.
⚖️ DCF Verdict: Accumulate — Kforce Inc. (KFRC)
Current price: $28.70 | Analyst Avg PT: $38.50
$23
🔴 Bear
$45
📊 Base
$81
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$41 | Begin position |
| Tier 2 — Add | ≤$34 | Add on weakness |
| Tier 3 — Full | ≤$24 | Full allocation |
| Sell Alert | ≥$69 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Accumulate KFRC at current prices (~$29). The stock is trading near the Bear case floor with a 5.6% dividend yield providing downside protection. The DCF Base IV of ~$35-39 implies 25-35% upside if the IT staffing market normalizes as analysts expect. Entry zone $25-29; add aggressively below $25. The 11% total shareholder yield means investors are well-compensated to wait for recovery. Becomes a Sell above $50 (near prior peak, approaching Bull IV).
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base (Depressed) | FY2025 FCF of $47M is at a cyclical trough (down from $84M in FY2023 and $83M in FY2022). The Base case models 12% FCF growth in Stage 1 — a recovery to historical $80-85M levels by Year 5. This is not heroic growth; it is a reversion to mean. |
| WACC Build (Small-Cap Adjusted) | WACC = 11.0%. CAPM Ke = 9.0% (Rf=4.3%, β=0.85 normalized from Finnhub's 0.49). Added 2.5% small-cap premium for $530M market cap company (Duff & Phelps methodology). Finnhub beta of 0.49 is unrealistically low for a cyclical staffing company. |
| Revenue Decline Context | Revenue declined 22% from FY2022 peak ($1.71B) to FY2025 ($1.33B). This is a cyclical downturn, not structural decline: IT staffing demand normalizes with enterprise tech spending cycles. Analysts expect revenue to trough in 2025 and recover to $1.37B (2026) and $1.43B (2027). |
| Dividend Risk | Payout ratio at 82% of EPS is elevated. FCF coverage is still 1.7×, which is adequate but thin. If the recovery stalls, the 8-year dividend growth streak is at risk. Watch FY2026 earnings closely. |
| Sanity Check | Analyst PT avg $38.50. Only 2 analysts with PTs. Base IV targeted within ±20% ($30.80–$46.20). The stock at $28.70 trades below both analyst PTs and the Bear case — deep value territory. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.