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.

GDP First Quarter Revised Down

"U.S. Q1 GDP revised down 6.4% vs -5.5 prev est"

So this morning revision of the United States GDP confirms the drastic decline to the America economy. Consumer spending also was down more then expected during the Q1.

The initial GDP report of -1.0 for the Q2 seems more favorable then expected. However, if this gets revised again, it may not meet the -1.5% that was projected by most economist.

This recession will continue to be drawn out till demand comes back influx with the global economy. Continue to look at labour increasing only when projects, and demand warrant it. Earnings continue to be driven through cost cutting measures rather then revenue growth for most companies.

Manpower rating lowered by Barclays Capital

Employment services company Manpower Inc. (MAN) saw its earnings estimates cut through 2010 on Monday by analysts at Barclays Capital.

Barclays cited continued weak economic signals in the U.S. and Europe for the downgrade. The analyst currently rates Manpower as “Equal-weight.”

Manpower shares were mostly flat in afternoon trading Monday.

The Bottom Line

We recently removed shares of MAN from our “recommended” list on May 13, when the stock was trading at $44.14. We were in the shares briefly at around the same levels from where we removed the name. The company has a 1.86% dividend yield, based on Friday’s closing stock price of $39.81. The stock has technical support in the $35-36 price area. If the shares can firm up, we see overhead resistance around the $45-46 price levels. We would remain on the sidelines for now.


Sources: Dividend.com

Robert Half International Earnings Q2 2009

So from AP Robert Half announced earnings.

"second-quarter profit dropped 93 percent as unemployment jumped amid the recession"

"For the period ended June 30, the company posted net income after paying preferred dividends of $4.8 million, or 3 cents per share, compared with $72.3 million, or 47 cents per share, in the year-ago period.

Revenue fell 39 percent to $749.9 million from $1.22 billion.

Analysts polled by Thomson Reuters expected, on average, earnings of 3 cents per share on slightly higher revenue of $755.4 million."

"Robert Half's revenue comes mainly from fees it charges for staffing consulting and services."

"Messmer (chairman and CEO), though, said he was encouraged that "sequential declines (in employment numbers) were significantly less than those reported in the previous quarters.""

Quote to take from their Q & A session:

"Keith Waddell

I guess we would say, outside the US, in the UK and Canada, the pace of the declines has improved. Continental Europe and Asia, the pace of the declines is either the same or worse. When you put them all together, the sequential decline outside the US for this past quarter was about the same as it was the prior quarter, although the components were different.

So, clearly Continental Europe and Asia were later to the game. But that being said; they've clearly caught the same cold that the US had, and are later in the results they are reporting and their impact of the downturn. So, the stabilization trends, may frankly when we talk about eight weeks of stable, that is consolidated and US has actually improved a little bit to offset the decline outside the US."



Yet there is still a decline in revenue. This has not been any different from technology companies reporting a decline in their revenue. What is a catalyst for growth? The stimulus? Rebound in the capital markets?

The main problem is that consumer demand continues to decline. Those with jobs are reluctant to spend. Those without are saving their walnuts for another season or possibly year. There has been a fundamental shift in the consumer which is a large component of the United States economy, which other economies around the world also become affected. Just as companies are trying to save money and invest in R&D most companies still do not see an upturn in the near future. A jobless recovery happened after the dot.com implosion, how is this any different.

Revenues will continue to be light especially in the human resources sector. Besides consumer spending small business are indirectly affected by this downturn. Without the capital and the resources to grow their business so does the need for services from a large recruitment agency. Why pay X amount of dollars when X recruitment agency is able to undercut them with the same service offerings. This becomes a low margin business with human capital turning from an asset to a liability. Companies with scale such as Manpower needs to continue to contain cost through reduction in headcount, and invest more in technology.

Trends such as contracting seem to be growing through off base online vendors. Recruitment agencies have no control over this increase in independent contracting.

Tomorrow is MAN's earnings, lets wait and see if this becomes gloom and doom or is there a silver lining in the horizon.

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.