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Staffing Stocks to Watch for Earnings this Week: MAN, TBI

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Leaving behind the Brexit fear and its consequences as well as other global and domestic issues, investors are now focusing on the all important Q2 earnings, which is in its nascent stage with a handful of S&P 500 stocks having reported their results so far. Per the latest Zacks Earnings Trends report as of Jul 15, out of the 36 S&P 500 members that have come up with their quarterly numbers, approximately 66.7% have posted positive earnings surprises, while 41.7% have come up with top-line beats.

According to the report, earnings for the 36 S&P 500 companies that have reported so far are down 3.9% from the same period last year, while revenues have dipped 0.1%.

The report further projects that earnings for the total S&P 500 companies will decline 5.4% from the year-ago period, and total revenue will fall 0.5%. We observe that this will be the fifth straight quarter, if the index witnesses a decline in earnings. Well, as the earnings season gradually gets into full swing, the picture would be much more prominent. So, do not be in a rush to count your chickens before they hatch.

The performance of the index is not restricted to a single sector, and of the 16 Zacks sectors, 9 are expected to witness an earnings drop in Q2, with Basic Materials, Industrial Products, Oil/Energy, Technology and Transportation being a big drag. However, the Business Services sector is showing earnings and revenue growth of 0.1% and 7.0%, respectively.

Let’s see what might be in store for these Business Services stocks when they release earnings results this week.

ManpowerGroup, Inc. (MAN - Free Report) , the global leader in the employment services industry, is set to report second-quarter 2016 results before the opening bell on Jul 21, 2016. Notably, the company beat the Zacks Consensus Estimate in each of the last four quarters, with an average earnings surprise of 10%.

MANPOWER INC WI Price and EPS Surprise

MANPOWER INC WI Price and EPS Surprise | MANPOWER INC WI Quote

We believe that the U.K.’s decision to exit the EU may not bode well for the company as this will affect the “hiring sentiment” in the region, which in turn, would hamper the company’s revenues. The strengthening U.S. dollar will also hurt ManpowerGroup’s performance as nearly 85% of its revenues is derived from international markets. Management earlier said foreign currency headwinds are likely to affect revenue growth by 2 cents per share during second-quarter 2016. Including a negative impact from foreign exchange, ManpowerGroup expects second-quarter 2016 earnings per share in the range of $1.47–$1.55.

ManpowerGroup carries a Zacks Rank #5 (Strong Sell) and has an Earnings ESP of 0.0%. The Zacks Consensus Estimate for the quarter is pegged at $1.52 (read more: Will ManpowerGroup Q2 Earnings Let Down Investors?).

TrueBlue, Inc. (TBI - Free Report) , which is involved in staffing, recruitment process outsourcing, as well as managed services, is slated to report its second-quarter 2016 results on Jul 20. Our proven model does not conclusively show that TrueBlue is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as TrueBlue’s Earnings ESP is -4.65% as the Most Accurate estimate stands at 41 cents, whereas the Zacks Consensus Estimate is pegged higher at 43 cents. TrueBlue’s Zacks Rank #3 (Hold) increases the predictive power of the ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

In the trailing four quarters, this Tacoma, WA-based company outperformed the Zacks Consensus Estimate by an average of 1.7%.

TRUEBLUE INC Price and EPS Surprise

TRUEBLUE INC Price and EPS Surprise | TRUEBLUE INC Quote

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