Manpower Issues Debt - Analyst Blog
14 Giugno 2012 - 8:22PM
Zacks
Manpower Inc.
(MAN), one of the leading employment service providers, is offering
€350 ($438.6) million worth of senior notes, due June 22, 2018. The
notes carry an annual coupon rate of 4.5%. Furthermore, the company
priced the notes at 99.974%, thus generating a yield of 4.505%.
Earlier, the company announced its
intention to refinance its €300 million notes due June 2012 through
the issuance of debt. We believe that the move is quite justified
as borrowing costs have gone down despite the significant
disruption in the global credit markets.
In fact, many other companies are
issuing debt to exchange their higher-interest debt for
lower-interest debt. Apart from this, the companies intend to
utilize the amount from the offering for common business purposes
while boosting shareholders’ return through share repurchases and
business expansion.
In addition, corporate issuances
are in high demand as U.S. treasuries are yielding low rates,
driving investors toward the bonds issued by sound
companies.
At the end of the March quarter,
Manpower had cash and cash equivalents of $553.5 million with total
debt of $721.8 million, or a net debt position of $168.3 million.
However, the debt-to-capitalization ratio was just 22%, which is
pretty low. Therefore, the only constraint on raising debt appears
to be liquidity. In any case, since the company will be using the
proceeds to retire old borrowings, the debt position is unlikely to
change much.
Manpower’s comprehensive range of
services makes the company a true global staffing firm. The company
provides services to the entire employment and business cycle
including permanent, temporary and contract recruitment, employee
assessment and selection, training, outplacement, outsourcing and
consulting.
Furthermore, the company’s brand
value and strong global network provide a competitive advantage and
reinforces its dominant position in the market. Manpower also
benefits from growth prospects in the under penetrated staffing
markets of Italy, Germany and the Nordic region, and has
significant operations in high-growth emerging markets of India,
China and Eastern Europe. Consequently, the company has good growth
potential.
However, the employment services
industry is highly competitive with limited barriers to entry, and
Manpower faces stiff competition in both domestic and international
markets from other established players, such as Randstad and
Kelly Services Inc. (KELYA). The intense
competition may limit the company’s market share and impact its
profitability.
Currently, Manpower holds a Zacks
#3 Rank, which translates into a short-term ‘Hold’ rating.
KELLY SVCS A (KELYA): Free Stock Analysis Report
MANPOWER INC WI (MAN): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Grafico Azioni Kelly Services (NASDAQ:KELYA)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Kelly Services (NASDAQ:KELYA)
Storico
Da Lug 2023 a Lug 2024