Manpower MAN 2010 Q1 Earnings

Manpower recently reported 2010 Q1 earnings.

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.

Manpower MAN Valuation Dec 2 09

Source: Yahoo

I am not recommending a position for MAN. This is my own observation of the valuation for Manpower (MAN). Please do your own research regarding the investment of any equities or bonds.

It is really amazing the run that the temporary employment sector has taken. However is this run up justified when revenue is still down double digits compared to its year over year comps. And down significantly over a two year period.

Take note of the following :

- Manpower's p/e is at one of the industry's high. This stock trades at multiples much higher then the S&P. This as Manpower's revenue and net income have taken an extremely hard hit.

Manpower for the fourth quarter has already warned that their estimates will come in below estimates. This comes as analyst have not raised Manpower's estimates that far from the median. The notion that Manpower is unable to meet already low expectations speaks volumes with regards to the condition of the macro economy.

There's talk of how management has been managing Manpower beat the industry with its superior management. I tend to disagree when your revenue and net income have taken a significant hit for the past couple of years, along with the baggage of significant debt on its balance sheet. If we are in for another dip in the economy as a number of economist have suggested, credit conditions will become increasingly tight. Already there is worry concerning the 2010 pending tax increase, and pending health care costs forced by the government.

- PEG ratio. Normally a PEG ratio near 1 means that a stock will have a higher chance at out performing. However MAN is at a significant premium based on the PEG ratio alone. MAN trades at over 8x the mean, while the industry is trading at 3x multiples. This is a significant premium to pay for a company that has declining revenue, and net income, and increasing debt.

- P/B. The price to book looks cheaper compared to the industry. However when you look at the Manpower's historical p/e ratio it has not significantly traded higher to its current multiples. And that is with significantly higher sales, and revenue. S&P which had changed their metrics of evaluating MAN from P/E to P/B, downgraded their rating to SELL, and lowered it price target to 46.

So I would trend very carefully as employment will not rocket back with a vengeance. Consumers have not significantly increased their spending, and manufacturing has ticked down. There are many issues in the economy that continues to need to be resolved before employment stocks begin to look attractive again.

Manpower MAN Valuation October 2009

So recently Citigroup Research has downgraded its rating near term of Manpower from "Buy" to "Hold", I will touch my own opinion of the valuations of MAN. Please do your own research with regards to the buying and selling of equities. I am not endorsing or advocating for the direction of a position.

From the near term analysis, MAN still seems overvalued.

P/E aspect MAN trades at 75.5 times current earnings. This should improve as MAN sales improve. However, at current mutiples this is well ahead of its valuation versus the SP and its peers.

Price to Book is also another metric to value a stock. Currently MAN trades at 1.72 which is well above its fair book value.

The yield of MAN is also below that of the SP. MAN current yield is 1.32%. The average is about 2.65 for the SP. Remember that compounded dividend may help your investment grow and offset any near term losses.

MAN's current profit margins of .7% also leaves growth oriented investors to be very cautious. Stock prices usually follow bursting sales and net income. EPS is a -82.09% and sales are a -35.70% for the year compared to last year.

Profit margins also continue to be very uneven, thus difficult to project business activity due to the nature of this cyclical cycle. Current year is 1.02%, last year 2.36%, two years ago it was 2.27%.

MAN also has a debt load, currently at 33.10%. Companies borrow to expand, however as sales falls, and credit conditions remain tight it is advised to look at companies that don't need to borrow, or leverage themselves as much to grow. If another recession becomes present in the near term once this initial stimulus wears off, then this debt may possibly become a problem.

So the bottom line, is that growth oriented investors should look elsewhere for a better story. Value investors should probably look elsewhere for a higher yield. While, those that fall in between should wait and see earnings on the 21st of this month. This is important as MAN projects this to be their strongest quarter of the year. However, will this justify their current valuation. At the mutiples of well over 75x current earnings, and with sales and profit margins as weak as they are, MAN should not be trading at the current multiples. It is out of line versus its peers and versus the market. If there are any questions regarding this analysis feel free to shoot a comment, and I will be more then happy to respond.

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.

Manpower Consulting Employment Is Down

So recently I checked the valuations of Manpower, and feel that estimates overly gauge a rebounding sentiment in a possible recovery. Manufacturing has continued to hug the bottom in terms of production, and hours along with most wages have continued to be depressed.

Manpower may have generated billions in sales, yet their profits from this recent quarter tells a more stressing sign.Lets take a look at their most recent reported quarter:

"Manpower Inc. (NYSE: MAN) today reported that net earnings for the three months ended March 31, 2009 were $2.3 million, or 3 cents per diluted share, compared to $75.5 million, or 94 cents per diluted share, a year earlier. "

That's a large free fall in net earnings; yet their stock continues to trade over 22x earnings.

While revenues also took a large hit."Revenues for the first quarter were $3.6 billion, a decrease of 32% from the year earlier period, or a decrease of 22% in constant currency. "

"Revenues for the first quarter were $3.6 billion, a decrease of 32% from the year earlier period, or a decrease of 22% in constant currency. "

Ask yourself why invest in a company such as Manpower, and the other staffing firm when these valuations are not up to par to their earnings. 22x earnings for a company that just released dire numbers is a cause for concern.

They should continue to cut overhead and continue to find cost controls as their earnings and revenue decelerate.

Manpower Consulting Employment Is Down

So recently I checked the valuations of Manpower, and feel that estimates overly gauge a rebounding sentiment in a possible recovery. Manufacturing has continued to hug the bottom in terms of production, and hours along with most wages have continued to be depressed.



Manpower may have generated billions in sales, yet their profits from this recent quarter tells a more stressing sign.Lets take a look at their most recent reported quarter:



"Manpower Inc. (NYSE: MAN) today reported that net earnings for the three months ended March 31, 2009 were $2.3 million, or 3 cents per diluted share, compared to $75.5 million, or 94 cents per diluted share, a year earlier. "



That's a large free fall in net earnings; yet their stock continues to trade over 22x earnings.



While revenues also took a large hit."Revenues for the first quarter were $3.6 billion, a decrease of 32% from the year earlier period, or a decrease of 22% in constant currency. "



"Revenues for the first quarter were $3.6 billion, a decrease of 32% from the year earlier period, or a decrease of 22% in constant currency. "



Ask yourself why invest in a company such as Manpower, and the other staffing firm when these valuations are not up to par to their earnings. 22x earnings for a company that just released dire numbers is a cause for concern.



They should continue to cut overhead and continue to find cost controls as their earnings and revenue decelerate.