The Zacks Analyst Blog Highlights: Domino's Pizza, Brinker International, ManpowerGroup, Kelly Services and Robert Half

For Immediate Release

Chicago, IL – October 25, 2011 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Domino's Pizza Inc. (DPZ - Snapshot Report), Brinker International Inc. (EAT - Analyst Report), ManpowerGroup (MAN - Analyst Report), Kelly Services Inc. (KELYA - Snapshot Report) and Robert Half International Inc. (RHI - Analyst Report).

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Here are highlights from Monday’s Analyst Blog:

Domino’s Beats on Top-Line Growth

Domino's Pizza Inc. (DPZ - Snapshot Report) reported third quarter 2011 adjusted earnings of 35 cents per share, which outpaced the Zacks Consensus Estimate by 2 cents and the year-ago quarter adjusted earnings by 8 cents.

The upbeat result was attributable to strong international and domestic performance.

Inside the Headline Numbers

Total revenue increased 8.3% year over year in the reported quarter to $376.3 million, comfortably surpassing the Zacks Consensus Estimate of $372.0 million. The growth was mainly driven by higher international and domestic same-store sales and expansion in the international market, partially offset by lower revenues due to the sale of company-owned stores to a franchisee in both the first and third quarters of 2011.

During the quarter, the company’s overall domestic same-store sales jumped 3.0% with company-owned units and franchises rising 4.2% and 2.9%, respectively, due to unit growth and higher traffic. The company had witnessed 11.7% domestic same-store sales growth in the year-ago quarter.

Same-store sales grew 8.1% in the international market. Global retail sales were up 13.3% or 9.1% excluding a foreign currency impact, while international stores recorded a robust growth of 25.1% and domestic stores spiked 3.1%.

The company’s operating margin expanded 40 basis points (bps) to 27.5% in the reported quarter, as cost of sales declined by the same magnitude to 72.5%.

Our Take

With the economy showing signs of improvement, we believe Domino’s will be able to maintain improved earnings momentum. Domino’s Pizza’s store level economics are strong and are driving growth.

Moreover, the company’s growth model does not involve substantial investments as it utilizes the master franchise structure. Management expects to implement promotional activities and improve execution in its corporate and franchise stores. We expect estimates to go up in the coming days based on better-than-expected third quarter results. The Zacks Consensus Estimates for 2011 and 2012 are pegged at $1.62 and $1.83, respectively.

One of Domino’s primary competitors, Brinker International Inc. (EAT - Analyst Report) will reports its first quarter 2012 results on October 26, 2011.

Domino’s holds a Zacks #2 Rank, implying a short-term Buy rating. We also reiterate our long-term Outperform recommendation on the stock.

Manpower Beats on Bottom Line

ManpowerGroup (MAN - Analyst Report), the global leader in the employment services industry, recently posted better-than-expected third-quarter 2011 results that topped the Zacks’ expectation on the heels of revenue growth across all regions with emerging markets portraying robust trends. Better expense control also lent support to the bottom-line.

However, fall in demand for the counter-cyclical outplacement services continues to impact the results. The company also cautioned that the softness in the current economic environment is likely to persist in 2012. To counter this, the company is contemplating exiting lower margin businesses and venturing into the high margin carrying business in the coming quarters.

The company continues to register robust demand for Experis end solutions offerings. Manpower also witnessed a surge in the permanent recruitment business.

Quarterly Discussion

The quarterly earnings of 97 cents a share beat the Zacks Consensus Estimate of 95 cents and soared 56.5% from 62 cents earned in the prior-year quarter. The foreign currency fluctuation favorably impacted net earnings by 8 cents a share.

Net earnings for the quarter under review dovetail with management’s guidance range of 90 cents to $1.00 per share.

Milwaukee, Wisconsin based company, Manpower, said that total revenue for the quarter soared 16.3% to $5,782.3 million from the prior-year quarter, and 8.8% in constant currency. However, the quarterly revenue fell short of the Zacks Consensus Estimate of $5,842 million.

We observe that although cost of services climbed 16.9% to $4,831 million, gross profit rose 13.1% to $951.3 million driven by top-line growth. However, gross margin contracted 40 basis points to 16.5%. Operating profit surged 45.1% to $158 million, whereas operating profit margin expanded 50 basis points to 2.7%.

Management Guided

Manpower now expects fourth-quarter 2011 earnings in the range of 85 cents to 95 cents a share, including a favorable impact of foreign currency translation of 3 cents but excluding reorganization related charges of 15 cents to 20 cents. The current Zacks Consensus Estimate of 91 cents for the fourth quarter remains in sync with management’s guidance range.

Management has projected a total revenue growth of 5% to 7% in constant currency for the quarter. On a segment basis, Manpower now expects mid-single digits growth in the Americas and Europe, and a low double digits growth in APME.

The company anticipates the Right Management business to be up sequentially but down between 8% and 10% from the year-ago quarter. Gross profit margin is expected to be in the range of 16.9% to 17.1% for the quarter, whereas operating profit margin is expected between 2.5% and 2.7%.

With a well-established network of nearly 3,900 offices in more than 80 countries, Manpower currently offers its services to approximately 400,000 clients. We believe that Manpower’s brand value, comprehensive range of services and a strong global network provide a competitive advantage and reinforce its dominant position in the market. However, looking at 2012, management projects low to mid single-digit growth in both revenue and gross profit, in the first quarter, given the current economic woes.

Currently, we have a long-term ‘Neutral’ rating on ManpowerGroup. Moreover, the company, which competes with Kelly Services Inc. (KELYA - Snapshot Report) and Robert Half International Inc. (RHI - Analyst Report), holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation, and correlates with our long-term view.

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Read the full analyst report on DPZ

Read the full analyst report on EAT

Read the full analyst report on MAN

Read the full analyst report on KELYA

Read the full analyst report on RHI