Last week saw the newest annual earnings release from ManpowerGroup Inc. (NYSE:MAN), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of US$21b were in line with what analysts predicted, ManpowerGroup surprised by delivering a statutory profit of US$7.72 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, ManpowerGroup's eleven analysts are forecasting 2020 revenues to be US$20.5b, approximately in line with the last 12 months. Statutory earnings per share are forecast to dip 7.2% to US$7.22 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$20.9b and earnings per share (EPS) of US$7.70 in 2020. It's pretty clear that analyst sentiment has fallen after the latest results, leading to lower revenue forecasts and a minor downgrade to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$98.15 price target, showing that analysts don't think the changes have a meaningful impact on the stock's intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values ManpowerGroup at US$112 per share, while the most bearish prices it at US$85.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can also be useful to step back and take a broader view of how analyst forecasts compare to ManpowerGroup's performance in recent years. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.0% a significant reduction from annual growth of 2.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 6.8% annually for the foreseeable future. It's pretty clear that ManpowerGroup's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ManpowerGroup. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on ManpowerGroup. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple ManpowerGroup analysts - going out to 2022, and you can see them free on our platform here.
We also provide an overview of the ManpowerGroup Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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