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On Feb 13, 2013, Zacks Investment Research upgraded ManpowerGroup (MAN - Analyst Report) to a Zacks Rank #1 (Strong Buy). The company has amassed a solid return of roughly 24% over the past one year.

Why the Upgrade?

Manpower has been witnessing rising earnings estimates on the back of better-than-expected fourth-quarter 2012 results, buoyed by effective cost management and better gross margin. The company declared impressive results on Jan 30, 2012, wherein earnings of 91 cents a share surpassed the Zacks Consensus Estimate of 77 cents by 18.2%.

This global leader in the employment services industryhas outperformed the Zacks Consensus Estimate for 17 straight quarters by an average of 61.9%. The long-term expected earnings growth rate for the stock is 7.4%.

Total revenue of $5,202.6 million also came ahead of the Zacks Consensus Estimate of $5,140 million but fell 5.1% year over year. However, we observe that the rate of decline in total revenue decelerated from 10.5% witnessed in the third quarter of 2012.

Manpower is now contemplating on exiting lower margin business and venturing into high margin business. The company is also focusing on controlling expenses. On the other hand, the ManpowerGroup Solutions business sustained its growth momentum.

The demand for the counter-cyclical outplacement services portrayed signs of steadiness, which increased 16% during the fourth quarter of 2012. Canada, U.K., China and India, all contributed to the company’s growth story.

The Zacks Consensus Estimate for 2013 rose 4.1% to $3.07 per share over the last 30 days. For 2014, the Zacks Consensus Estimate advanced 8.3% over the same timeframe to $3.66 per share.

Other Stocks to Consider

The stock worth considering in the business services sector is Korn/Ferry International (KFY - Snapshot Report), which holds a Zacks Rank #1 (Strong Buy) and is expected to continue with its upbeat performance and sustain its positive earnings surprise trend. Other stocks that should be merited are AMN Healthcare Services Inc. (AHS - Snapshot Report) and Robert Half International Inc. (RHI - Analyst Report), both of whichhold a Zacks Rank #2 (Buy).

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