ManpowerGroup Hikes Dividend

Zacks

ManpowerGroup Inc. (MAN) recently announced its decision of a dividend hike. The company raised its semi-annual dividend by 7% to 46 cents (or 92 cents annually) from 43 cents a share (or 86 cents annually).

The increased dividend will be paid on Jun 14, 2013, to stockholders of record as of Jun 3, 2013. The dividend yield based on the new payout and the last closing market price is approximately 1.8%.

The news of the dividend hike reflects Manpower’s plan of utilizing free cash to enhance shareholders’ return, thereby boosting investors’ confidence in the stock.

This Zacks Rank #2 (Buy) company recently came up with better-than-expected first-quarter 2013 results. The company’s adjusted quarterly earnings came in at 63 cents a share that substantially surpassed the Zacks Consensus Estimate of 45 cents and jumped 26% year over year.

Manpower ended the quarter with cash and cash equivalents of $583.4 million, total debt of $751 million and shareholders’ equity of $2,501.1 million, reflecting a debt-to-capitalization ratio of 23.1%. The company has no borrowings under its $800 million revolving credit facility.

Manpower now expects second-quarter 2013 earnings in the range of 84 cents – 92 cents per share. Management anticipates second-quarter total revenue to decline between 3% and 5% in constant currency and at an equivalent rate in U.S. dollars from the prior-year quarter.

Revenues in the Americasare expected to remain flat, while it is expected to decline in the range of 8% and 10% in Southern Europe. Northern Europerevenues are projected to decrease in the range of 1% – 3%. The company expects APME and Right Management segments to register a decline in the low-single-digit in revenues.

Going forward, Manpower expects to generate higher gross margin from the Americasand Southern Europe, which in turn is expected to boost the overall gross margins of the company. Operating margin is expected to improve during the second quarter and projected in the range of 2.5% – 2.7%.

With a well-established network of approximately 3,500 offices in about 80 countries, Manpower currently offers its services to about 400,000 clients. We believe Manpower’s brand value, comprehensive range of services, and a strong global network provide a competitive advantage over its peers Robert Half International Inc. (RHI), Kelly Services, Inc. (KELYA) and Korn/Ferry International (KFY) and reinforces its dominant position in the market.

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