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What's in Store for ManpowerGroup (MAN) in Q2 Earnings?

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ManpowerGroup Inc. (MAN - Free Report) is scheduled to report second-quarter 2018 results on Jul 20, before the opening bell.

While we expect the company’s top line to do well on the back of revenue growth across most of its reportable segments and positive impact of constant currency and acquisitions, the bottom line is expected to benefit from favorable foreign currency movements. Expenses related to previous acquisitions can act as a headwind.

We observe that shares of ManpowerGroup have declined 31.9% against the industry’s gain of 5% on a year-to-date basis.

 

Top Line Likely to Improve Year Over Year

The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $5.85 billion, indicating year-over-year increase of 13.1%. The top line is expected to benefit from positive impact of constant currency and acquisitions. Notably, management expects second-quarter revenues to grow between 5% and 7% on a constant currency basis and acquisitions to positively impact the top line by 40 basis points.

Additionally, we expect ManpowerGroup to witness top-line growth across most of its reportable segments. The consensus estimate for revenues from Southern Europe segment indicates an improvement of 21.3% year over year to $2,593 million. The same for Northern Europe is expected to rise 14.7% year over year to $1,471 million, 11.3% year over year to $716 million for APME (Asia Pacific Middle East) and 1.1% year over year to $1,069 million for Americas segment. However, revenues from Right Management segment are expected to decline 3.5% year over year to $57 million.

In first-quarter 2018, the company’s revenues were $5.52 billion, up 16.1% year over year and 5.4% on a constant currency basis. It was backed by positive currency impact of 11% and acquisitions’ contribution of 50 basis points.

Segment-wise, revenues from Southern Europe increased 28.2% year over year to $2,312 million. Northern Europe recorded a 14.4% increase in revenues to $1417.6 million and APME segment revenues rose 13.9% year over year to $720.2 million. However, revenues from America reduced 0.3% year over year to $1,022.6 million and the same from the Right Management segment were down 10.6% to $50 million.

Bottom Line Expectations

The Zacks Consensus Estimate for earnings per share (EPS) in the to-be-reported quarter is pegged at $2.35, reflecting year-over-year growth of 29.1%. The consensus estimate lies within the company guided EPS range of $2.33-$2.41 for second-quarter 2018. The guidance includes a positive impact of 18 cents from foreign currency.

In first-quarter 2018, earnings rose 57.8% from the year-ago quarter to $1.72 per share.

Our Model Doesn’t Suggest a Beat

Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Stocks with a Zacks Rank #4 or 5 (Sell-rated) are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

ManpowerGroup has a Zacks Rank #4 and an Earnings ESP of -2.90%.

Stocks to Consider

Here are a few stocks from the broader Business Services sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings in second-quarter 2018:

Aptiv PLC (APTV - Free Report) has an Earnings ESP of +0.49% and a Zacks Rank #2. The company is slated to report quarterly numbers on Jul 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

IQVIA Holdings Inc. (IQV - Free Report) has an Earnings ESP of +0.25% and a Zacks Rank #2. The company is slated to report quarterly results on Jul 24.

Avis Budget Group, Inc. (CAR - Free Report) has an Earnings ESP of +5.17% and a Zacks Rank #1. The company is scheduled to report quarterly numbers on Aug 7.

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