Friday, August 7, 2009

Manpower Valuation Analysis

With the recent run up in staffing firms lets look at the valuations of Manpower since it seems to be the most expensive based on P/E both current and forward P/E.

MAN earns an overbought score of 88 out of 99.
50 day moving average at 44.03.
P/E at 66.40.

I'm still trying to figure out how MAN valuation even when you take into account P/S that it is valued over the present analyst price target.

Moody's also put Manpower on credit watch as earnings have fallen through a cliff compared to last year. Although they can manage their debt in the short term with their cash pile, MAN will face continued challenges as other business service providers are more nimble to grow its business with Manpower's mounting debt.

I continue to like RHI (Robert Half International) as valuations are better poised to sidestep this continued credit crisis. The minimal debt is advantageous to RHI position in the near term.

I would like to see more stabilization on Manpower's larger revenue generating markets. Developed nations such as Australia continues to face a soft market. I would cut as much staff there, and / or hours till they see more short term demand. As it seems that they are not optimizing there team. At least MAN is aware that Australia is under performing. Hugging the bottom doesn't mean that there is job growth. Hence, the cautious approach with MAN's valuation.

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