October 5th, 2025

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PUBLISHED: [10/5/2025]

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October 5th, 2025

Last Price                      Fair Value Estimate           Market Cap                     

$48.68 USD         $80 USD                $1B USD

Key Takeaways

Table of Contents

Business Overview

Heidrick & Struggles International is a staffing and recruiting company offering executive search and consulting services to businesses across the globe. Founded in 1953 in Chicago, Heidrick & Struggles International was the world's first leadership advisory firm.

The company offers three primary services: Heidrick Search, Heidrick On-Demand, and Heidrick Consulting. 

Heidrick search provides executive search in which the company evaluates a client's business culture and challenges in order to identify candidates for leadership roles. Heidrick and Struggles aids in interviewing, negotiations, onboarding, and transitioning. 

Heidrick On-Demand primarily provides temporary solutions, connecting companies with on-demand talent needed for transitions and interim positions to keep business momentum. 

Heidrick Consulting, another branch of Heidrick’s main offerings, helps organizations develop and accelerate the performance of company leaders, reshape culture, and develop DEI programs and initiatives. Heidrick’s consulting branch differentiates itself from other consulting firms through the company's strong foundation in understanding the people-side of business. 

Why We Like Heidrick & Struggles International 

We believe that Heidrick and Struggles presents an attractive buying opportunity at the moment as the staffing and consulting company has excellent financial health with high cash on hand, management with a clear focus on margin expansion, superior revenue growth when compared to industry peers, and high free cash flow relative to their current valuation. We see the executive recruiting space as one unlikely to be significantly disrupted by AI in the near future because of the relationship and judgment based nature that is hard to replicate, something important to look for given the current environment of AI disruptions in various different industries. 

Financials and margins

2024 financials include $1.1 billion in revenue, $7.5 million in operating income, $23.1 million in net income, and $124.1 million in free cash flow, an 11% conversion. 

Heidrick and Struggles has very consistent revenues, generating $1.1 billion in 2024, $1 billion in 2023, $1.1 billion in 2022, and $1 billion in 2021. Since 2018, their revenue has grown at a compounded annual growth rate of 9.9%. As margins have grown during this period, EBITDA has grown at a compounded annual growth rate of 10.3%. 

Revenue growth has significantly outpaced industry peers in 2024 and most recently in the second quarter of 2025. A comparison of revenue growth is seen above including Heidrick and Struggles (HSII), Korn Ferry (KFY), Robert Half (RHI), ASGN (ASGN),  and ManpowerGroup (MAN).

Looking at margins, a very consistent high single-digit to low double digit EBITDA margin is seen. In the second quarter of 2025, Heidrick and Struggles had a gross margin of about 24%, an operating margin of about 7.8%, and a net margin of about 6.5%. Their gross margin is seen as fairly typical while their operating and net margins are seen as higher when compared to other staffing and recruitment companies. A comparison of these margins is seen below including Heidrick and Struggles (HSII), Korn Ferry (KFY), Robert Half (RHI), ASGN (ASGN),  and ManpowerGroup (MAN).

Looking at their balance sheet, the company is in very good financial health. They currently have $399.5 million in cash and zero debt. When subtracted from a $1 billion market cap this equates to an enterprise value of about $600 million. We see this cash as a huge positive as it gives management optionality for capital allocation including the introduction of a buy back program, dividend increases, or M&A deals. Note that cash is inflated at the end of each year because of bonuses payments to consultants that are paid out in quarter one of the following year. 

Valuation Analysis 

Heidrick and Struggles trades at a price to earnings ratio of 30.39 and an enterprise value to EBITDA ratio of 7.13. When compared to industry peers, the enterprise value to EBITDA ratio is seen as relatively lower. The price to earnings ratio is seen as higher, reflecting superior margins and faster revenue growth. 

From a valuation perspective, we are largely drawn to Heidrick and struggle because of its capital allocation flexibility and high free cash flow which is not reflected in these ratios. With $399.5 million in cash and 2024 free cash flow of $124.1 million, the company is able to pursue buy backs, dividend, mergers and acquisitions, or strategic reinvestments. Additionally, the cash serves as a buffer during potential future downturns.  

We do not feel that a DCF model is effective in valuing this company. Instead, we derived our fair value estimate of $80 by applying an enterprise value to EBITDA multiple of 12.5 to Heidrick and Struggles. We believe 12.5x multiple to be justified by their faster than peers revenue growth, sizable cash balance, and free cash flow which support a higher premium than peers. 

Management

Current management initiatives focus on improving operation efficiency and expansions of capabilities and expertise. Emphasis on utilizing digital platforms and AI to create greater consultant impacts is seen. Management believes that there is significant room for organic and inorganic margin growth. By having this focus, paired with their cash on hand that can be used to invest in these initiatives, we believe that management will be very effective in creating value.

Management's revenue growth and margin targets are seen above for each division of the company. Their short to near term target is 4-6% organic revenue growth and 5-8% organic EBITDA growth per year. 

Looking at insider buying, 5,387 shares have been purchased in the last three months, through 1 open market buy, and 131,353 shares have been purchased in the last 12 months, through 17 open market buys. While 49,747 shares have been sold by insiders in the last 12 months, we do not see this as concerning due to the fact that there is still a significant amount of buying taking place. 

A dividend of $0.15 is paid quarterly, working out to about 1.23% annually given their current stock price of $48.68. While small, it is very possible that management increases the dividend given their financial situation and the flexibility granted by their high cash on hand. 

Technicals:

The technical situation presents an attractive buying opportunity for HSII in continuation of the stock’s uptrend. The green trend lines mark an uptrend in both the weekly and daily charts. The blue horizontal lines show prices of support at $48.77 and $42.83. Technical analysis corroborates HSII as a buy in accordance with our previously described valuation analysis.

3 year, weekly chart:

1 year, daily chart:

Risks

We believe that potential catalysts for an increase in Heidrick and Struggles stock price could include but are not limited to: 

Catalysts 

We believe that potential catalysts for an increase in Heidrick and Struggles stock price could include but are not limited to: 

Key catalyst:

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