Shares of ManpowerGroup Inc. (MAN - Analyst Report) rose nearly 7% in the pre-market trading session as the company posted better-than-expected first-quarter 2014 results. Earnings per share came in at 86 cents, which handily beat the Zacks Consensus Estimate of 67 cents and increased substantially year over year.
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Consistently strong performances across all major regions, along with effective cost management were the primary growth drivers.
Revenues & Margins
Total revenue rose 2.8% (up 3.0% in constant currency) year over year to $4,904.0 million, based on robust regional performances. Moreover, reported revenues came ahead of the Zacks Consensus Estimate of $4,836.0 million.
Gross profit increased 3.3% (up 3.6% in constant currency) to $816.5 million due to higher revenues, partly offset by a rise in cost of services. Gross margin remained almost unchanged at 16.6%.
ManpowerGroup posted operating profit of $126.9 million, which rose more than twofold from the prior-year quarter.
Selling and administrative expenses fell 6.3% (down 6.1% on constant currency) to $689.6 million.
By geographic segments, revenues from the United States grew 2.1% year over year to $720.5 million. The segment’s operating profit increased 81.2% to $13.4 million from the prior-year quarter.
In Other Americas, revenues decreased 9.4% (but grew 3.6% in constant currency) to $350.6 million while the segment’s operating profit rose 43.8% (up 64.6% in constant currency) to $12.6 million.
In France, revenues rose 6.3% year over year (up 2.3% in constant currency) to $1,217.3 million while the segment’s operating profit increased 72.0% (up 65.0% in constant currency) to $51.2 million.
In Italy, revenues increased 6.5% year over year (up 2.5% in constant currency) to $274.7 million. The segment’s operating profit rose 7.8% (up 3.4% in constant currency) to $12.6 million.
In Other Southern Europe, revenues increased 18.9% (up 14.7% in constant currency) to $230.0 million from the year-ago quarter. The segment’s operating profit rose 97.5% (up 90.0% in constant currency) to $4.6 million.
In Northern Europe, revenues rose 6.8% (up 4.6% in constant currency) to $1,463.9 million while operating profit increased over fourfold to $38.4 million, both on a year-over-year basis.
In APME (Asia Pacific Middle East), revenues came in at $573.7 million, down 9.3% (down 1.1% in constant currency) year over year. The segment’s operating profit came in at $20.2 million, up 38.1% (up 52.4% in constant currency) from the prior-year quarter.
Revenues from Right Management decreased 4.3% (down 4.0% in constant currency) year over year to $73.3 million. The company posted operating income of $8.3 million, up substantially from the year-ago quarter.
Other Financial Details
ManpowerGroup ended the quarter with cash and cash equivalents of $696.5 million, total debt of $529.7 million, which reflected a debt-to-capitalization ratio of 15.1% and shareholders’ equity of $2,975.8 million.
Moreover, ManpowerGroup incurred a capital expenditure of $8.3 million during the quarter.
ManpowerGroup now expects second-quarter 2014 earnings per share in the range of $1.26 to $1.34. The Zacks Consensus Estimate for second-quarter 2014 stands at $1.21.
With a well-established network in about 80 countries, Manpower currently provides services to about 400,000 clients. We believe that the company’s brand value, broad range of services and a strong global footprint provide it a competitive edge over peers.
Currently, Manpower carries a Zacks Rank #2 (Buy). Some other better ranked stocks in the same sector include On Assignment Inc. (ASGN - Snapshot Report), CTPartners Executive Search Inc. , Korn/Ferry International (KFY - Snapshot Report). While On Assignment sports a Zacks Rank #1 (Strong Buy), CTPartners and Korn/Ferry International have the same Zacks Rank as ManpowerGroup.