Saturday, October 23, 2010
So be careful when seeking something that maybe too good to be true.
Sunday, September 5, 2010
Thursday, July 22, 2010
It was good to see that revenue ticked up for most of these corporations. Although, I'm still cautious with the early developments of austerity measures in Europe, and the looming regulations and tax regulations in the United States, revenue did improve for the staffing sector.
Profitability does leave something to be desired, until there robust action in terms of revenue that is sustained in a normalized recovery, I am cautiously optimistic on the sector.
Friday, July 2, 2010
125,000 jobs were cut. While the private sector added a less than robust 83,000 jobs. Consensus estimate were for the creation of 110,000 jobs in the private sector.
Over 652,000 people left the labor force.
Average work week hours also declined, from 34.2 to 34.1 hours worked.
The economy continues to experience significant headwinds with cuts from the delayed decision of extended unemployment benefits, to the possible future austerity measures that the US may follow the rest of the world. Time will tell if there will be another jobs bill to stimulus the sluggish recovery.
Thursday, June 3, 2010
Monday, May 31, 2010
Thursday, May 27, 2010
Bob Janjuah states that a massive turnaround in corporate behaviour in leverage, capex, investment, hiring and spending binge is extremely unlike for now and for the rest of this year.
This is a pretty honest assessment after all the rose colored glasses calls of a buoy hiring landscape for the staffing firms. However, premenant placement has barely budged from historical levels, and consumers continue to be selective on their purchasing behavior.
The U.S. also revised its GDP downwards to 3.0% rather than bullish estimates from firms such as Goldman Sachs of 3.7%. Besides that unemployment claims also missed estimates.
Thursday, May 20, 2010
471,000 vs. expectations of 440,000.
Continuing claims were also above expectations 4,625,000 vs. expectations of 4,610,000.
Unfortunately, unemployment claims will continue to rise. With the Census staffing most probable ending June 30, 2010 expect a dramatic uptick in weekly claims, and continuing claims.
Besides that business confidence, and continued worries in the Euro Zone, and the lack of collective reasoning in Europe may possibly spread and cause significant slowdowns across major regions of the world.
I have touched on this mainly on Robert Half International's largest segment is the United States , however other staffing groups have also seen very minimal uptick in hiring compared to historical rebounds in the economy. I remain very cautious, and a decline in the economy is more than probable at this point.
Monday, May 10, 2010
The recovery in the labor markets is broadening out, according to a report released Monday by the Conference Board.
The board said that its April employment trends index increased 0.9% to 94.7, from a revised 93.9 in March, first reported as 94.4. The index has risen for eight consecutive months and is up 7.1% from a year ago.
The ETI report follows last Friday's government employment release that showed nonfarm payrolls increased 290,000 last month.
Despite that strong job gain, the board remains cautious about the jobs outlook.
"The employment trends index continued to rise in April, but its rate of growth has slowed in recent months," said Gad Levanon, associate director.
Source: Dow Jones Newswire
Tuesday, April 27, 2010
Revenue was also light of estimates. Q1 2010 revenue $737.2M vs. analyst consensus of $750.76M. Robert Half International although it sustained through the down draft of the financial crisis continues to face slack demand in all components of the company.
When valuations have risen as fast as they have, and demand has been lukewarm from the cyclical bottom, these temporary, and staffing firms continue to produce fairly weak margins.
I continue to see this sector as overvalued relative to the S&P's earnings.
Thursday, April 22, 2010
Manpower beat the estimates as an analyst from S&P raised their estimates. While Manpower lowered their estimates for the next quarter to set the bar lower ahead of it's acquisition of COMSYS.
The problem with the the increase is primarily the continued weak profitability in Manpower's numbers.
Operating margins in all regions experienced flat to slightly negative operating margins.
With the increase in revenue growth all MAN managed was sub two million in profits. If there is any downturn, and a majority of the analysts have not priced in what a Greece, and PIIGS default would cause to Manpower's underlying business with a bulk of their revenue coming from the European nations. Out of all the majorly traded staffing firms on the NYSE, MAN has the most underlying risk with such a sizable stake of it's business from Europe.
France has a large stake of its bonds in Greece, with over 700+ billion. If Greece were to continue to find itself in limbo, France may find it's own economic growth in jeopardy.
Tuesday, April 13, 2010
"According to the NFIB's latest survey, most owners think business conditions will not improve in the next six months, few are hiring, and fewer than usual are investing in their business. "
Thursday, April 8, 2010
Innovative small technology and service companies slowed hiring against
broader U.S. averages during March, and while layoffs rose slightly, they
remained well below last year´s highs. Net employment growth appeared flat in
March, which may indicate that companies are waiting for signals about the
broader business climate.
Friday, April 2, 2010
Although, employment has slightly ticked up, the US continues to experience a structural change in employment. These structural changes take years to right its ship.
An environment of higher dollar, increased regulation, and health care costs, and taxes usually do not fuel a booming economy. Time will tell if the economy can continue to make gains.
Saturday, March 27, 2010
Twenty-seven states recorded over-the-month unemployment rate increases, 7 states and the District of Columbia registered rate decreases, and 16 states had no rate change, the U.S. Bureau of Labor Statistics reported today.
Over the year, jobless rates increased in 46 states and the District of Columbia
and declined in 4 states. The national unemployment rate in February, 9.7
percent,remained unchanged from January, but was up from 8.2 percent a year
Mish had an interesting piece on the unemployment picture in the US. Although, the employment picture has mildly risen from the bottom, unemployment continues to remain at elavated levels.
Source: Mish Economic
Wednesday, March 24, 2010
After pouring over some of the recent competitors and Manpower's latest earnings. Some of the metrics has changed, and some metrics still remain fairly cautious sign of the state of affairs with Manpower.
As Manpower has increased their earnings, valuations have come down. However risks are abound.
I'll provide some near term pros and cons of the stock, please do your own research, as this is not a recommend for the purchase or sale of the securities. I'm only providing my own research.
+ Near term improve in debt. Debt levels has narrowed to 757 Mil.
+ The pending acquisition of IT provider Comsys.
While there are some positive catalyst in places, risk still remains.
-While I am positive on the acquisition of Comsys, Manpower's ability to generate return on invested capital has been very limited. Manpower's return on invested capital is 0.92.
- Weak staffing levels in Europe, with risks associated with the Euro and the debt crisis which risks growth in the European Union. This remains a wild card as analysts from what I've read have not priced the risk of a currency implosion by the Euro. With the IMF, and non bipartisan support through the EU, Manpower's largest industrial partners France and Germany will be somehow affected longer term by the turmoil within the PIIGS. Risks either due to spending cuts, reduced spending by consumers, and increased debt obligations by specific countries.
- Continued pressure on valuations near term with MAN trading at 82.6x earnings, while the S&P500 trades at 11.7, historically MAN trades at a historical p/e of 29.0.
- PEG continues to trade well over one, and has risen back to 5.51.
Two worrisome metrics that continue to place MAN at risk, as business continue to face hurdles:
Historic trends of MAN receiving payment are at elevated levels:
- Days Sales Outstanding
- Days Inventory Payable Period
Year 2000 17.4
As stated there continues to be risk as MAN is having difficulty collecting payment compared to historic levels. I continue to be cautious as Manpower continues to face hurdles within its largest market (France), and pressure with labour regulations and unions in Europe.
The increasingly likely bailout of Greece, and possibly Portugal will have ramifications throughout the EU. The EU has historically been one of the slower growth areas in the global arena. With these spending and debt restructuring Manpower faces increased challenges, even as the global economy bounces from the bottom.
Wednesday, March 10, 2010
Small-business owners in the U.S. turned slightly more pessimistic in February, although employment readings--from the U.S.'s main source of new jobs--grew a shade more positive.
The Small Business Optimism Index lost 1.3 points to 88.0 last month, reported the National Federation of Independent Business in a press release Tuesday.
The NFIB noted that only two of 10 components posted gains last month.
The subindex covering expected business conditions dropped 10 points to a -9 reading, and sales expectations dropped 3 points to zero.
The NFIB said that owners complained "poor sales" was their top problem.
Source: Dow Jones Newswires
Saturday, February 27, 2010
Wednesday, February 10, 2010
"In January, small businesses had to cut prices despite tangling with inflation while profits remained weak, according to the survey of the federation's 2,114 members."
"There are "still more owners planning to reduce stocks than planning new orders," the group found."
Remember that small businesses generate most of the job creation in the United States.
Even as a number of temporary help providers have exceeded estimates, there still continues to be lax growth in sales.
Monster, Inc. announced a large acquisition of Hotjobs which I am not a fan of. They seem to have overpaid for the Hotjobs property even though it is under the price of the prior bidding war with Yahoo.
In the near term there should be underlying risk for these companies as the stimulus and low interest rates start to fade with increased regulations and reform.
Tuesday, February 2, 2010
Estimates beat and revenue Delcine have narrowed, although still down.
Q1 2010 guidance of -.05 to -.15 vs. estimates of -.06.
After looking at today's news on Manpower it seems to be a mixed bag. I'm fairly favorable to their new acquisition of COMSYS IT Partners, Inc. The acquisition will allow MAN to jump start their sales growth. However this will come at the cost of their already ballooning debt levels. As long as MAN can improve on this cash flow then their debt will be manageable. Any downturn and MAN will continue to face challenges to its debt levels as Moody's had suggested a number of months ago.
In terms of their earnings which may be muted due to flat to slightly positive growth in their European markets. There are lots of risk involved in their European markets, especially if the PIIGS creates currency instablity for Europe. One risk that underlines this issue is a possible bailout by the IMF, or by France (Manpower's largest market) and Germany. If this situation comes to roost then the European economy may face significant hurdles. And cap privatization growth in France and Germany (Europe largest industrialized nations). While US markets continue to face challenges as taxation and reform will continue to put pressure on hiring. Slack demand has lessen any likelihood of a V shaped recovery.
Valuations will be the next topic of concern for Manpower's, even as revenue dropped less than expected year over year.
Monday, February 1, 2010
There is an unbelievable lack of over site from the upper level management which causes friction with lower level employees. There were already enough issues with the firm and its auction preferred shares, and the liquidation process. There is a manta that states, "When in doubt, stay out". And as I've seen that if management continues to live in a bubble, they will continue to lose revenue streams to their competitors.
Sunday, January 31, 2010
So I've looked through a number of charts from the US St. Louis government site that tells the tale of some of the problematic and in my opinion structural woes that faces the United States.
Thursday, January 28, 2010
Robert Half beat estimates by .04 and revenue of $737.4 million vs. $703.6 million.
However revenue is still down 25+% year over year. It sees Q1 2010 earnings at .03 - .08 vs. .06. While it sees revenue at 725 mil - 775 mil vs. 715.6 mil.
Overall Robert Half continues to manage its expenses far better than its much larger competitors such as Manpower (MAN) which continues to hemorrhage in debt. I will be interested in when Robert Half will be looking to expand its operations.
One point to note is that Robert Half's margins look a bit muted. This continues to be an area to focus on. If the economy continues to expand, Robert Half will look fairly attractive due to its favorable cost and debt management.
Monday, January 25, 2010
Kelly Services (KELYA) Feb 5 2010 4th quarter and full year 2009
Manpower (MAN) Feb 2 2010 4th quarter and full year 2009
Monster Worldwide (MWW) Feb 3 2010 4th quarter and full year 2009
Robert Half International (RHI) Jan 28 2010 4th quarter 2009
It will be an interesting earnings period for these four companies. I'm sure a number of them may surprise to the upside and beat consensus, however growth remains very much muted in the overall US economy. Emerging markets may face hurdles as their recovery starts to overheat and may need to take the foot off of the petal with their stimulus policies.
Tuesday, January 19, 2010
- Temporary employment has been increasing. However as an investor beware of the red flags in terms of valuations. The valuations traded by these temporary & human resources are out of kilter with their actual growth. A large number of these stocks have continued to see negative growth. Structural changes in employment take many years before they can be corrected.
- Manufacturing employment continues to decline. This hurts companies such as Manpower (MAN) due to their heavy emphasis in the manufacturing sector.
- The average work week remains at 33.2 hours. Hence if there is a remote pick up in the economy, capacity utilization, along with current work staff will grow. Rather then hiring massive number of temps. Although short term temps look attractive due to the lack of benefits paid out to a majority of temps, temps create low morale and weak productivity on a longer term bases.
Because of the weak outlook by companies for revenue growth open positions, especially permanent positions will be weak at best.
Tuesday, January 12, 2010
The National Federation of Independent Business said its small business optimism index fell for the second straight month, dropping 0.3 point to 88.0 in December.
"Small business owners are not in a hiring mood because customers are not in a spending mood, the group said. Owners continued to liquidate inventories and weak sales trends gave them little reason to order new stocks."
Friday, January 8, 2010
- Nonfarm payrolls fell by a seasonally adjusted 85,000 in December.
- Number of discouraged workers rose by 287,000 over the year to 929,000.
- Total hours worked in the economy were unchanged in December. The average workweek was unchanged at 33.2 hours, near the record low.
- An alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, rose to 17.3% from 17.2%.
Thursday, January 7, 2010
- - Manpower continues to trade at a very rich premium at 1.78 P/B. A price to book near one means value. Clearly the market and speculation from analyst believe that Manpower will return to its glory days such as the Citigroup's analyst boosting its price target to 69. As seen in the price chart MAN is trading above it normalized trading range. MAN has traded well above the growth period during expansion, besides the recent credit induced bubble in 2007. The analyst clearly believes that the economy will produce jobs at such a torrid pace that valuations will be fair. I think we have to remember that permanent jobs provide higher margins. Temporary positions do not provide the valuations that would prop up multiplies of close to 90+x earnings.
- - Manpower is trading at a clip of 90+x current p/e, 83x this year's earnings, and 52x next year's earnings. Compared to the SP500 and Nasdaq p/e ratio, Manpower (MAN) is significantly overvalued.
- - Revenue continues to be in a significant decline from its high of 2007. While debt levels have continued to rise. For this one reason alone I am a bit more positive on Robert Half (RHI) due to its very minimal debt. Any future shocks in the economy will hurt Manpower's cash flow, and cause another possible downgrade in its credit rating.
- - Challenges remain with health reform, higher taxes, quantitative easing of liquidity later this year will continue to crimp hiring by small businesses which produce well over 80% of the jobs in the US.
- - Manpower's largest market France has stated that they are looking to reduce their debt levels to the EU standard. The stimulus package that they have provided has provided a slight uptick in their GDP. However challenges remain with the continued contraction in the European markets, especially Eastern Europe.
And last but not least Manpower did warn during their 3Q conference call
that they have warned for their 4Q. Irrational exuberance continues in this
market while actual demand from consumers, and tight and inefficient credit