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Why Is ManpowerGroup (MAN) Down 9.8% Since its Last Earnings Report?

It has been about a month since the last earnings report for ManpowerGroupMAN . Shares have lost about 9.8% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to its next earnings release, or is MAN due for a breakout? 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 catalysts.

ManpowerGroup Beats Q4 Earnings and Revenue Estimates

ManpowerGroup reported strong fourth-quarter 2017 results with healthy year-over-year increase in earnings and revenues on the back of diligent execution of operational plans. GAAP earnings were $216.3 million or $3.22 per share compared with $127.4 million or $1.87 per share in the year-earlier quarter. Adjusted earnings for the quarter were $2.12 per share and comfortably surpassed the Zacks Consensus Estimate of $2.05. The year-over-year improvement was attributable to significant top-line growth and favorable foreign currency movements. Moreover, the Tax Cuts and Jobs Act enacted in the fourth quarter also gave earnings a healthy boost. For full-year 2017, GAAP earnings were $545.4 million or $8.04 per share compared with $443.7 million or $6.27 per share in the prior year.

Revenues in the reported quarter came in at $5,637.5 million compared with $4,956.1 million in the year-ago quarter. Quarterly sales exceeded the Zacks Consensus Estimate of $5,550 million.

For 2017, the company generated total revenues of $21,034.3 million compared with $19,654.1 million in 2016.

Segmental Details for Q4

Revenues generated from America were $1,071.8 million compared with $1062.9 million in the prior-year quarter.

Revenues from Southern Europe were $2,399 million compared with $1912.2 million in the prior-year quarter.

Aggregate quarterly revenues from Northern Europe , APME , Right Management were $1418.1 million, $695.2 million and $53.4 million compared with $1292.8 million, $629.6 million and $58.6 million in the year-ago quarter, respectively.

Margins

Operating profit for the reported quarter was $238.7 million compared with $212 million in the year-ago period. The increase in operating profit, despite rise in operating expenses, is due to significant top-line growth.

Operating profit for America increased to $57.7 million from $53.3 million of the prior-year quarter. Also, operating profit for South Europe and APME increased to $133.1 million and $28.1 million from $101.9 million and $21.7 million, respectively. However, operating profit for Northern Europe and Right Management decreased to $47.1 million and $10.6 million from $48.8 million and $11.9 million, respectively.

Balance Sheet and Cash Flow

ManpowerGroup exited 2017 with cash and cash equivalents of $689 million compared with $598.5 million in the previous year. Long-term debt was $478.1 million compared with $785.6 million in 2016.

For 2017, the company generated net cash of $400.9 million from its operating activities, down from $600 million recorded a year ago.

Outlook

ManpowerGroup is poised to grow on the back of a productive workforce and sound restructuring initiatives. Moreover, its strong global network also provides the company with a competitive advantage over its peers. Backed by these positives, this Zacks Rank #2 (Buy) company has given bullish first quarter earnings guidance. For first-quarter 2018, GAAP EPS is anticipated to lie within the $1.60-$1.68 per share range.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. In the past month, the consensus estimate has shifted by 14.2% due to these changes.

ManpowerGroup Price and Consensus

ManpowerGroup Price and Consensus | ManpowerGroup Quote

VGM Scores

At this time, MAN has an average Growth Score of C, however its Momentum is doing a lot better with an A. Following the exact same course, the stock was also allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Based on our scores, the stock is more suitable for value and momentum investors than growth investors.

Outlook

MAN has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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