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Why Is Manpower (MAN) Up 8.7% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for ManpowerGroup (MAN). Shares have added about 8.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Manpower due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

ManpowerGroup Misses on Q3 Earnings and Revenues

ManpowerGroup reported disappointing third-quarter 2019 results missing the Zacks Consensus estimate on both earnings and revenues.

Adjusted earnings of $1.92 per share missed the Zacks Consensus Estimate by a penny and declined 22.3% year over year on a reported basis and 18% on a constant-currency basis. Earnings met the midpoint of the guided range of $1.88-$1.96 per share.

Revenues of $5.25 billion were behind the consensus mark by $101 million. Revenues declined 3.1% year over year on a reported basis but were up 0.3% on a constant-currency basis. Challenging market environment in Europe continues to weigh on the company’s top line.

Segmental Revenues

Revenues from America totaled $1.07 billion, up 2.9% year over year on a reported basis and 5.5% on a constant-currency basis. In the United States, revenues came in $645.7 million, up 2% both on reported and constant-currency basis. In the Other Americas subgroup, revenues of $425 million increased 4.5% on a reported basis and 11% on a constant-currency basis. Americas contributed 20% to total revenues.

Revenues from Southern Europe were up 0.9% on a reported basis and 5% on a constant-currency basis to $2.35 billion. Revenues from France came in at $1.38 billion, down 5.4% on a reported basis and 1% on a constant-currency basis. Revenues from Italy were $376.6 billion, down 8.2% on a reported basis and 3.9% on a constant-currency basis. The Other Southern Europe subsegment generated revenues of $592.9 million, up 28.7% on a reported basis and 31.9% on a constant-currency basis. Southern Europe contributed 45% to total revenues.

Northern Europe revenues declined 10.1% on a reported basis and 5.3% on a constant-currency basis to $1.16 billion. The decline was due to weakness in Germany, Sweden, Belgium and the Netherlands. The segment accounted for 22% of total revenues in the quarter.

APME revenues totaled $621.9 million, down 12.8% on a reported basis and 12.6% on a constant-currency basis.  Revenues grew in Japan, Korea, Vietnam, Thailand, Middle East and Singapore, and declined in Australia. The segment contributed 12% to total revenues.

Revenues from the Right Management business were up 2.5% year over year on a reported basis and 4.7% on constant-currency basis to $48.1 million. The segment contributed 1% to total revenues.

Operating Performance

Gross profit in the third quarter was $840.3million, down 5.7% year over year on a reported basis and 2.5% on a constant-currency basis. Gross profit margin came in at 16%, down 40 basis points (bps) year over year.

Operating profit of $217 million increased 0.2% year over year on a reported basis and 3.3% on a constant-currency basis. Operating profit margin came in at 4.1%, up slightly year over year.

Balance Sheet and Cash Flow

ManpowerGroup exited the third quarter with cash and cash equivalents balance of $807.1 million compared with $770.4 million in the prior quarter. Long-term debt at the end of the quarter was $983.2 million, compared with $1.03 billion in the preceding quarter.

The company generated $218.3 million of cash from operating activities and Capex was $12.2 million in the quarter. ManpowerGroup repurchased $51 million of common stock in the quarter.

Fourth-Quarter Outlook

ManpowerGroup anticipates earnings per share in the range of $2-$2.08. The guidance includes a negative impact of 7 cents from foreign currency.

The company expects revenues to be down 2% to flat on a constant-currency basis. Further, it anticipates income tax rate in the fourth quarter to be around 33%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -6.42% due to these changes.

VGM Scores

At this time, Manpower has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Manpower has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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