Manpower Upgraded to Neutral - Analyst Blog
31 Ottobre 2012 - 3:30PM
Zacks
We adopted a Neutral stance on
ManpowerGroup (MAN), a global leader in the
employment services industry, with a price target of $40.00,
following better-than-expected third-quarter 2012 results. Earlier,
we had an Underperform recommendation on the stock.
The company posted
stronger-than-anticipated results on the back of increased gross
margin and effective cost management. The quarterly earnings of 79
cents a share surpassed the Zacks Consensus Estimate of 68 cents.
Net earnings per share also came ahead of management’s previously
provided guidance range of 64 cents to 72 cents a share.
Manpower’s comprehensive range of
services makes the company a true 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
provides it with a competitive advantage and reinforces its
dominant position in the market.
The company is now contemplating on
exiting its lower margin business and venturing into high margin
business. The company is also focusing on controlling expense. On
the other hand, the ManpowerGroup Solutions business sustained its
growth momentum. The demand for the countercyclical outplacement
services is also portraying signs of steadiness, which rose 18%
during the quarter.
However, what compels us to have a
cautious view on the stock is the company’s dwindling top and
bottom lines performances as well as soft projections of the same
for the fourth quarter. The quarterly earnings did came ahead of
the estimate but it fell 18.6% year over year as the soft economic
environment resulted in weak demand for recruitment services,
particularly in Europe. Strong dollar also acted as a
deterrent.
Moreover, the rate of decline in
total revenue of Milwaukee, Wisconsin based Manpower has
accelerated, when comparing sequentially. After falling 8.1% year
over year in the second quarter of 2012, total revenue dropped
10.5% to $5,172.3 million during the third quarter. In constant
currency too, the rate of decline increased to 3.8% in the quarter
under review from 0.8% in the previous quarter. The soft top line
performance did weigh upon the bottom line. However, one thing that
instilled confidence was that unlike the second quarter, total
revenue in the third quarter beat the Zacks Consensus Estimate of
$5,106 million.
Manpower provided a dismal
fourth-quarter 2012 outlook. The company now expects earnings
between 72 cents and 80 cents a share, reflecting a year-over-year
decline of 26.5% to 18.4%, respectively. Management now projects
total revenue to decline between 5% and 7% in the U.S. dollars, or
in the band of 3% to 5% in constant currency from the prior-year
quarter.
Given the pros and cons, we prefer
to remain on the sidelines. Manpower, which competes with
Kelly Services Inc. (KELYA) and Robert
Half International Inc. (RHI), holds a Zacks #3 Rank that
translates into a short-term “Hold” rating.
KELLY SVCS A (KELYA): Free Stock Analysis Report
MANPOWER INC WI (MAN): Free Stock Analysis Report
ROBT HALF INTL (RHI): 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