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.