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Manpower (MAN) Poised to Gain From Improved Labor Market


On Jan 11, we updated the research report on ManpowerGroup Inc. MAN, a leader in the employment services industry.

By providing services ranging from staffing solutions to engagement and consulting services including permanent, temporary and contract recruitment, employee assessment, selection, training, outplacement, outsourcing and consulting, ManpowerGroup has turned itself into a true global staffing firm. Its brand value and strong global network give it an edge over its peers.

The company has operations in America, Europe and APME (Asia Pacific & Middle East). According to an employment outlook survey published by the company, the year-over-year employer hiring plans for the first quarter of 2018 appear stronger in 60% countries. Domestic job market also improved in the last three months after a pull-back in September with two back-to-back hurricanes. This bullish outlook is likely to work in the favor of a company, which specialises in providing global staffing solutions.

The European segment of the company, which contributed about 67% of consolidated revenues in the last quarter with the Southern European division contributing about 42% and the Northern European division about 25%, is expected to further strengthen in the upcoming quarters.

However, the impact of the Brexit referendum on employment and economic condition of the region remains uncertain and has the potential to adversely affect the company’s revenues to a large extent. Shares of the company have underperformed the industry in the last three months with a gain of 7%, significantly lesser than a rise of 12.2% for the latter.

Nevertheless, ManpowerGroup has made significant investments in a bid to expand its permanent recruitment solutions offerings. Management is focusing on internal drivers like disciplined pricing and tough control on productivity to ensure uninterrupted profitability. Through the sound restructuring initiatives and cost recalibration, the company hopes to increase its margins further.

ManpowerGroup currently has a Zacks Rank #2 (Buy). Other stocks worth considering in the industry include Raven Industries, Inc. RAVN, S&P Global Inc. SPGI and On Assignment, Inc. ASGN each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Raven has an expected long-term earnings growth rate of 10%. It has exceeded estimates thrice in the trailing four quarters with an average beat of 25.8%.

S&P Global has an expected long-term earnings growth rate of 12.5%. It has exceeded all estimates in the trailing four quarters with an average beat of 11.1%.

On Assignment has an expected long-term earnings growth rate of 18%. It has exceeded estimates thrice in the trailing four quarters with an average beat of 5.4%.

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