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Bull of the Day: Manpower Group (MAN)

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Last week marked the ninth anniversary of the “generational bottom,” and all throughout the world, markets are celebrating a prolonged stretch of relative health and recovery. In the U.S., that recovery is best exemplified by the strength of the jobs market, and investors can benefit from this strength by targeting companies like Manpower Group (MAN - Free Report) , a global staffing powerhouse.

Manpower is a world leader in innovative workforce solutions, serving both large and small organizations across all industries and sectors. The company is the third-largest staffing firm in the world. Manpower employs millions of people every year, throughout dozens of countries.

The company’s latest earnings report was strong, but its stock failed to generate momentum thanks to a market-wide selloff. Now MAN sits at an attractive level for value investors, and an even better earnings outlook—lifted by improved analyst sentiment—makes this Zacks Rank #1 (Strong Buy) a great option right now.

Latest Earnings Report

Manpower most recently reported earnings on Feb. 2. Adjusted profits for the quarter were $2.12 per share, surpassing the Zacks Consensus Estimate of $2.05. Quarterly revenues came in at $5.64 billion, up from $4.96 billion in the prior-year period and ahead of our $5.55 billion consensus estimate.

Meanwhile, operating profit for the reported quarter was $238.7 million compared with $212 million in the year-ago quarter. The increase in operating profit, despite rise in operating expenses, is due to significant top-line growth.

Manpower exited 2017 with cash and cash equivalents of $689 million compared with $598.5 million in the previous year. Long-term debt was $478.1 million compared with $785.6 million in 2016. The company also provided strong guidance in its latest report.

Estimate Revisions and Key Stats

 

As we can see, Manpower’s strong results and guidance led analysts to raise their estimates for the company’s upcoming fiscal period. We have seen one negative revision for its current-quarter estimates, but other than that, this improved earnings outlook has been on the back of 100% agreement to the upside among revising analysts.

On top of this, Manpower is holding an “A” grade for Value in our Style Scores system. The company is trading at just 14x forward 12-month earnings, which is a discount compared to its industry’s average of 18x. Meanwhile, its P/S ratio of 0.4 is also a discount to the industry average.

Manpower is also remarkably financially sound. As mentioned, its cash position improved significantly over in 2017, and the company is generating about $8.50 in cash per share right now. Manpower also has very little debt. This means Manpower is a great low leverage pick, which should be even more attractive in our rising rate environment.

Finally, investors should note that Manpower is leading one of strongest industries right now. In fact, the “Staffing Firms” group is currently sitting in the top 10% of the Zacks Industry Rank.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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