Earnings Preview: Manpower

Manpower Inc. (MAN), the global leader in the employment services industry, is scheduled to report its first-quarter 2011 financial results before the bell on Thursday, April 21, 2011. The current Zacks Consensus Estimate for the quarter is 32 cents a share. For the quarter under review, revenue is $4,897 million, according to the Zacks Consensus Estimate.

Fourth-Quarter 2010, a Synopsis

On February 2, 2011, Manpower posted fourth-quarter 2010 results that topped the Zacks estimates on the heels of revenue growth across all geographies with Europe performing remarkably well.

The quarterly earnings of 66 cents a share outpaced the Zacks Consensus Estimate of 61 cents and rose 40.4% from 47 cents earned in the prior-year quarter. The foreign currency fluctuation negatively impacted net earnings by 2 cents a share. Net earnings for the quarter under review also surpassed management’s guidance range of 54 cents to 62 cents a share.

Milwaukee, Wisconsin-based 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 ahead of the Zacks Consensus Estimate of $5,101 million.


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

First-Quarter 2011 Consensus

Analysts surveyed by Zacks, expect Manpower to post first-quarter 2011 earnings of 32 cents a share that remains at the high-end of the company’s guidance range. The current Zacks Consensus Estimate compares with 4 cents a share earned in the year-ago quarter. The estimates in the current Zacks Consensus for the quarter range from a low of 30 cents to a high of 35 cents.

Zacks Agreement & Magnitude

Of the 14 analysts following the stock, one analyst raised the estimate and another analyst lowered the estimate in the last 30 days having no material impact on the Zacks Consensus Estimate. In the last 7 days, only one analyst revised the estimate upwards with none chopping their estimates, thereby keeping the Zacks Consensus Estimate unchanged.

Positive Earnings Surprise History

With respect to earnings surprises, Manpower has topped the Zacks Consensus Estimate over the last four quarters in the range of 8.2% to 157.1%. The average remained at 69.8%. This suggests that Manpower has beaten the Zacks Consensus Estimate by an average of 69.8% in the trailing four quarters. Given the past performance we expect the company to outperform the Zacks Consensus Estimate.

Manpower in Neutral Lane

Manpower’s comprehensive range of services makes the company 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 reinforces its dominant position in the market. Manpower leverages a strong network of about 4,000 offices spanning across 82 countries and serving approximately 400,000 clients. The company benefits from growth prospects in under-penetrated staffing markets.

Manpower also witnessed that with the improvement in the economic conditions, the company’s staffing business is also stabilizing. However, Manpower’s Right Management brand continues to struggledue to a fall in demand for the counter-cyclical outplacement services. Revenue from Right Management services plunged 32.9% to $87 million and 32.4% in constant currency in fourth-quarter 2010. Management expects the Right Management 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, translating into a short-term ‘Hold’ rating.

KELLY SVCS A (KELYA): Free Stock Analysis Report

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