Shares of ManpowerGroup Inc. MAN have gained 41.3% year to date, significantly outperforming the 12.1% rally of the industry it belongs to.
With expected EPS growth rate of 3.1% and a market cap of $5.5 billion, it is a stock that investors should retain in their portfolios.
What’s Driving the Company?
The staffing industry is currently in good shape, benefiting from economic strength and stability. With strong manufacturing and non-manufacturing activities, there is plenty of room for ManpowerGroup’s growth in the United States in the near to mid-term. There are ample opportunities in emerging markets as well because penetration rates are still below global standards.
ManpowerGroup is trying to mitigate its ongoing revenue softness through strong pricing discipline and cost control. It is expected to witness strong growth in the solutions business, especially in MSP and RPO solutions, through 2019.
In a bid to increase productivity and efficiency, the company is making significant investments in technology. It is implementing front office systems, cloud-based and mobile applications, and making enhancements to its global technology infrastructure across several markets. The company is also investing in digitalization of its workforce solutions.
A consistent track record of shareholder returns through dividends and share repurchases makes ManpowerGroup a reliable way for investors to compound wealth over long term.
Despite riding on significant growth prospects, ManpowerGroup is not free from headwinds. Southern Europe, the company’s largest reportable segment, is likely to continue to experience staffing margin pressure, resulting from loss of competitiveness and employment (CICE) subsidy in France. Escalation in costs due to investments in digital and restructuring activities weighs ManpowerGroup’s bottom-line. Nevertheless, we believe that strong pricing discipline and cost control will help it mitigate these hurdles in the long run.
Zacks Rank & Stocks to Consider
Currently, ManpowerGroupis a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few top-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting NCI, WEX WEX and FLEETCOR Technologies FLT. While Navigant Consulting sports a Zacks Rank #1, WEX and FLEETCOR carry a Zacks Rank #2 (Buy).
Long-term expected EPS (three to five years) growth rate for Navigant Consulting, WEX and FLEETCOR is 13.5%, 15% and 16%, respectively.
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