Economic momentum naturally spells a stronger job market to come. And no where is this connection more evident than in the outlooks for the staffing companies.
Three of them are highly-ranked for their earnings momentum and one just reported a strong quarter that should see its estimates move higher as well.
Manpower (MAN) is a $6.5 billion global employment services firm with its largest operations, based on revenues, located in the United States, France and the United Kingdom. The company provides a variety of staffing and workforce management services and solutions, including temporary staffing services, contract services and training and testing of temporary and permanent workers.
I recall "trying" to own this stock in 2015 because of its improving fundamentals. But the political and economic situations in Europe were a bigger uncertainty than any growth drag and the shares were caught in a solid downtrend from the $90's to $70.
Now MAN is a Zacks #2 Rank, with a Value-Growth-Momentum (VGM) Score of "A," and the stock is up over 65% since the Brexit lows near $60 in June. The company is forecast by a consensus of Wall Street analysts to see nearly $20 billion in revenues this year after hitting a trough at $19.33 billion to close a rough chapter of declines at the end of 2015.
Manpower is also expected to achieve 5.8% EPS growth in 2017.
Kforce (KFRC) is the $660 million web-based staffing firm with a 50-year history that you may never have heard of. The Tampa-based company provides flexible and permanent staffing solutions for organizations and career management for individuals in the specialty skill areas of IT, finance & accounting, engineering, and health care.
Here's how the company characterizes their mission...
"Our name stands for KnowledgeForce describing our highly skilled professionals, knowledge gained from over 50 years of experience, and the power of our team to provide the Right Match. We provide flexible and direct hire staffing professionals in Technology and Finance & Accounting, engaging over 23,000 highly skilled professionals annually with more than 4,000 customers."
This Zacks #1 Rank, with a VGM Score of "A," is projected to see about 27% EPS growth this year. After a 12% earnings beat was reported for Q4 last week, analysts raised KFRC full-year estimates from $1.48 to $1.59. The stock trades at an attractive 15.5X forward multiple, better than the industry average of 19X.
Cross Country Healthcare (CCRN) is a $490 million provider of healthcare staffing services. They also provide staffing of clinical research professionals and allied healthcare professionals, such as radiology technicians, rehabilitation therapists and respiratory therapists.
Their staffing operations are complemented by other human capital management services, including search and recruitment, consulting, education and training and resource management services. And their quarterly numbers keep them in the upper ranks here at Zacks as a #1 Strong Buy with a VGM Score of "A."
After a big earnings beat for their Q3, a typical pattern for this company, analysts had to once again boost estimates, taking the full-year 2016 to nearly 32% EPS growth. 2017 profit projections slow down to just 14.4% growth, but the revenue picture makes this company a real bargain.
That's because this year's sales forecast is for $869 million on the top line, which would give CCRN a very attractive Price-to-Sales valuation ratio of around 0.6.
Bonus Jobs Play
Insperity (NSP) is a $1.5 billion human resources and business solutions staffing firm. Formerly known as Administaff, NSP is engaged in Workforce Optimization in the marketplace, MidMarket Solutions, Performance Management, Expense Management, Time and Attendance, Organizational Planning, Employment Screening, Recruiting Services, Retirement Services, Business Insurance and Technology Services.
On Monday, Insperity reported a Q4 earnings beat but a miss on the top line. Sales jumped to $729.1 million from $650 million a year ago, coming in below the $732-million consensus.
In a statement, the company said its adjusted Q1 EPS is expected to come in a range of $1.78 - $1.87, above the $1.75 average estimate; and full-year EPS is forecast to surge to a range of $4.21 - $4.42, ahead of the $4.12 consensus. Shares vaulted over 13% on this bright guidance about their business.
Despite the sales miss, we should expect Wall Street analysts to be boosting Insperity EPS estimates this week, pushing the stock from a Zacks #3 Rank to a #2 or even #1.
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