Tuesday, August 4, 2009

Manpower Earnings Q2 2009

Earnings came out. The earnings was fair considering the environment. Stablization in the US, Italy, and France. Weakness in Australia and some other European nations.

Manpower has done a fairly good job containing cost, and has been buoy by Right Management this quarter. However, although third quarter wise is suppose to be Manpower's strongest quarter; margins will come down due to Right Management seasonal decline.

From AP:

"Co issues in-line guidance for Q3, sees EPS of $0.07-0.21 vs. $0.18 consensus."
From Zacks:
"Management provided a cautious outlook for the third quarter of fiscal 2009. On a consolidated basis, it expects revenues to decline between 29% and 31% in reported dollars (24% to 26% in constant currency)."

So forward guidance is a bit iffy on the EPS front. I'm still a bit tepid with the valuations of Manpower when its peers are not receiving as much of a premium as MAN.

P/E excluding extraordinary items at 66x earnings as of July 24, 2009.
While the PEG is over 11x.
Net Profit Margin at 0.03%
Besides that as the chart presents that this stock is well overbought. When net income is down as much as it has the run up has not been justified. Even as they beat estimates this does not reflect a rebound in employment.

I find this extremely expensive vs. its peers. The stock is pricing in a recovery. If for some reason there is a "W" shaped recovery MAN is going to decline. Remember that employment is a lagging indicator to a recovery.

1 comment:

  1. The following is Manpower's Earnings report from the same quarter last year.

    "Foreign operations boosted second-quarter revenue of Manpower Inc. (NYSE: MAN), and the company reported some stabilization in the United States.

    The world's second-largest staffing firm posted a 17.3% increase in second-quarter revenue to $5.90 billion from $5.03 billion in the same period last year. In constant currency, however, revenue rose 5.4%.

    "We were able to increase our revenues to record levels, contributed primarily by many of our major European countries," Chairman and CEO Jeffrey Joerres said. "At the same time, we have experienced some stabilization in the U.S. operations."

    In the U.S., revenue rose 0.6% to $491.6 million from $488.6 million in the second quarter of 2007. But, excluding acquisitions, revenue was down 9%, Joerres said in a conference call with analysts.

    Manpower's European operations outside of France and Italy posted a 29.6% increase in revenue to $2.05 billion. In constant currency, the increase was 17.6%. Manpower's Italian second-quarter revenue of $441.4 million was up 7.6% on a constant currency basis.

    Executives did report a softening market in some areas of Europe. And, in France, revenue was down 5.4% on a constant currency basis to $1.96 billion.

    The company's Jefferson Wells division's second-quarter revenue fell 9.6% to $75.8 million. Revenue at its Right Management operations rose 9.4% to $115.7 million. The increase was 9.9% in constant currency.

    Manpower's second-quarter gross margin slipped to 19.5% from 20.3%.

    Second-quarter net income fell 33.0% to $107.4 million from $160.4 million. The decrease was 42.5% on a constant currency basis.

    Manpower said second-quarter results included a net charge of $14.8 million. The company received $35.2 million from a payroll tax break in France, but that was more than offset by a $50.0 million charge involving an increase in its legal reserve for an investigation by the French Competition Council.

    The company's second quarter of 2007 received a $57.2 million boost from a French tax break.

    The company estimates U.S. third-quarter revenue growth of between 7% and 9% including acquisitions, CFO Mike Van Handel said in the conference call with analysts. Excluding acquisitions, revenue will contract, but at a slower rate than the second quarter, he said.

    Van Handel said overall third-quarter revenue growth is estimated at between 2% and 4%.

    Manpower Inc. (NYSE: MAN)
    For the first quarter ended June 30, 2008, compared with the same period in 2007.
    Revenue: $5.90 billion, +17.3%
    Net income: $107.4 million, -33.0%"


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