Tuesday, February 2, 2010

Manpower Q4 2009 / Year Earnings

Manpower released their earnings this morning. They beat their 4th quarter earnings with an EPS of .48 vs .24. Revenue also beat with revenues coming it at 4.412 Billion vs. estimates of 4.160 Billion.

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.

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