Unemployment Rises in 27 States, Drops in 7 States February 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
earlier.

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

Manpower (MAN) Staffing Updated Valuations March 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

Year

2000 67.2
2001 69.9
2002 71.1
2003 72.3
2004 71.4
2005 73.0
2006 73.2
2007 74.0
2008 68.7
TTM 83.8

- Days Inventory Payable Period

Year 2000 17.4
2001 17.9
2002 17.4
2003 18.2
2004 18.7
2005 19.1
2006 19.9
2007 20.9
2008 20.1
TTM 28.8

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.

US Small-Business Optimism Falls FEB 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

Jobless Claims Rise to 496,000 February 2010

This has been the second consecutive week where jobless claims has risen. This week the jobless claims has risen to 496,000 from 474,000 week ending in February 20. Jobless claims continues to face challenges compared to the consensus. There has been no reason to believe that job creation will happen in an instant. That's part of the reason for this blog to outline that the economy will take years for it to change its ways for a number of reasons.

Chart Source: BetaInvestment.com

Dark clouds hang over U.S. small businesses

"Small business owners entered 2010 the same way they left 2009 -- depressed," the group said, noting its Small Business Optimism Index reading for January was still below the 90 mark, the dividing line between positive and negative outlooks."

"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."

Source: Reuters


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.

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.

The Coleman Group Morgan Stanley Burlingame

It is interesting to see how internal departments facilitate operations. While looking at some of the lack of coordination and acumen with fellow employees. I feel an environment that does not communicate, and presents a power struggle is a counteractive environment. Until this group can resolve its internal issues I would not recommend leaving my capital under their supervision.
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.