KELYA Kelly Services Inc

Manpower Inc.’s (MAN) comprehensive range of services makes it a truly global staffing firm. The company provides services for the entire employment and business cycle, including permanent, temporary and contract recruitment, employee assessment and selection, training, outplacement, outsourcing and consulting.

The company’s brand value and strong global network provide a competitive advantage to the company and reinforce its dominant position in the market. Manpower leverages a strong network of about 4,000 offices spanning 82 countries and serving approximately 400,000 clients. The company benefits from growth prospects in under-penetrated staffing markets.

Manpower posted better-than-expected fourth-quarter 2010 results that topped the Zacks Consensus Estimate on the heels of revenue growth across all geographies. Europe performed remarkably well. The quarterly earnings of 66 cents per share outpaced the Zacks Consensus Estimate of 61 cents and rose 40.4% from 47 cents in the prior-year quarter.

Manpower now expects first-quarter 2011 earnings in the range of 26 cents to 34 cents a share.

Manpower also witnessed a surge in demand for information technology employees with a gradual recovery in the economy. The companies are reluctant to hire permanent staff until they witness a complete recovery in the economy. They are still resorting to "temping" to guard against economic hiccups should they happen. 

Manpower, said that total revenue for the quarter soared 18.1% to $5,209.6 million from the prior-year quarter, and 22.1% in constant currency. The quarterly revenue also came well in ahead of the Zacks Consensus Estimate of $5,101 million.

With the improvement in economic conditions, the company’s staffing business is also stabilizing. However, Manpower’s Right Management brand continues to struggle due to a drop in demand for the counter-cyclical outplacement services. Revenues from Right Management services plunged 32.9% to $87 million and 32.4% in constant currency. Management expects Right Management's business to decline between 21% and 23% in first-quarter 2011 in constant currency.

Given the pros and cons, we prefer to maintain a long-term ‘Neutral’ rating on the stock. Moreover, Manpower, which competes with Kelly Services Inc. (KELYA) holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.

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