Bear Of The Day: Manpower Group (MAN)

Brian Bolan

Manpower Group (MAN) is a Zacks Rank #5 (Strong Sell) and the stock has dropped for some obvious reasons.  Of course in a lockdown there is not a lot of demand for staffing.  The probability of many other businesses closing down after the lockdown is lifted is high, so there could be an increase in amount of people looking for work.  That will also hurt a name like MAN.  But is it a good time to look at this name as a play for the long haul?

Description

ManpowerGroup Inc. provides workforce solutions and services in the Americas, Southern Europe, Northern Europe, and the Asia Pacific Middle East region. The company offers recruitment services, including permanent, temporary, and contract recruitment of professionals, as well as administrative and industrial positions under the Manpower and Experis brands. It also offers various assessment services; training and development services; career management; and outsourcing services related to human resources functions primarily in the areas of large-scale recruiting and workforce-intensive initiatives. In addition, the company provides workforce consulting services; contingent staffing and permanent recruitment services; professional resourcing and project-based solutions in information technology, engineering, and finance fields; solutions in the areas of organizational efficiency, individual development, and career mobility; and recruitment process outsourcing, TAPFIN managed, and talent based outsourcing services, as well as Proservia services in the areas of digital services market and IT infrastructure sector. It operates through a network of approximately 2,500 offices in 75 countries and territories. The company was founded in 1948 and is headquartered in Milwaukee, Wisconsin.

Earnings History

I see a good earnings history for MAN.  Three out of the last four quarter were beats and the lone miss was just of a penny.

Over the last four quarters MAN has posted a positive earnings surprise of 2.7%.

Earnings Estimates

The Zacks Rank really keys on the movement of earnings estimates.  For MAN, the estimates are falling.  This year moved from $7.63 down to $5.14 and next year has declined from $8.26 to $6.97.

That sort of negative revision will send a stock lower... but why would the numbers for 2021 fall so much?

I believe that the COVID 19 crisis will come to an end in the next few months... not next year.  More over, the gap of closed businesses will allow several new ones to open and existing names to close the market share gap in short order.  So will there be less demand for staffing in 2021 -- the analysts sure think so, but I think the stock recovers with the economy.

Valuation

A 10x forward earnings multiple is actually a little high for a stock that is seeing revenue contract at a 3.65% rate.  That said, the 1.2x book multiple is very low and margins are still positive.

This is certainly a stock worth taking a deeper look at as the COVID crisis will not last forever.

Chart

 

ManpowerGroup Inc. Price, Consensus and EPS Surprise

ManpowerGroup Inc. Price, Consensus and EPS Surprise

ManpowerGroup Inc. price-consensus-eps-surprise-chart | ManpowerGroup Inc. Quote

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