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ManpowerGroup (MAN) Q4 Earnings and Revenues Top Estimates

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ManpowerGroup Inc. MAN reported better-than-expected fourth-quarter 2019 results.

The stock grew 6.6% since it reported quarterly results as EPS guidance for first-quarter 2020 was encouraging. The company anticipates EPS in the range of $1.33-$1.41, the midpoint of which ($1.37) is above the Zacks Consensus Estimate of $1.35.

The stock has gained 24.5% over the past year, against the 7.3% decline of the industry it belongs to.

Quarterly adjusted earnings of $2.15 per share surpassed the Zacks Consensus Estimate by 5.4% but declined 11.9% year over year. Earnings came above the guided range of $2-$2.08 per share.

Revenues of $5.2 billion marginally beat the consensus mark but declined 3.6% year over year on a reported basis and 2% on a constant-currency basis. Challenging market environment in Europe continues to weigh on the company’s top line.

Let’s delve deeper into the numbers.

Segmental Revenues

Revenues from America totaled $1.06 billion, up 1.6% year over year on a reported basis and 3.2% on a constant-currency basis. In the United States, revenues came in at $626.8 million, down 0.9% both on reported and constant-currency basis. In the Other Americas subgroup, revenues of $434.1 million increased 5.4% on a reported basis and 9.5% on a constant-currency basis. Americas contributed 20% to total revenues.

Revenues from Southern Europe were up 1.4% on a reported basis and 3.9% on a constant-currency basis to $2.33 billion. Revenues from France came in at $1.36 billion, down 5.2% on a reported basis and 2.3% on a constant-currency basis. Revenues from Italy were $380 million, down 5.9% on a reported basis and 3% on a constant-currency basis. The Other Southern Europe subsegment generated revenues of $589.4 million, up 28.2% on a reported basis and 29.3% on a constant-currency basis. Southern Europe contributed 45% to total revenues.

Northern Europe revenues declined 8.7% on a reported basis and 6.4% on a constant-currency basis to $1.16 billion. The segment accounted for 22% of total revenues in the quarter.

APME revenues totaled $596.5 million, down 18.5% on a reported basis and 19.4% on a constant-currency basis. The segment contributed 12% to total revenues.

Revenues from the Right Management business were up 3.8% year over year on a reported basis and 4.6% on a constant-currency basis to $52 million.The segment contributed 1% to total revenues.

ManpowerGroup Inc. Revenue (TTM)

Operating Performance

Gross profit in the fourth quarter was $859.6 million, down 2.4% year over year on a reported basis and 0.5% on a constant-currency basis. Gross profit margin came in at 16.5%, up 20 basis points (bps) year over year.

Operating profit of $191.6 million decreased 12.1% year over year on a reported basis and 10% on a constant-currency basis. Operating profit margin came in at 3.7%, down 30 bps year over year.

Balance Sheet and Cash Flow

ManpowerGroup exited the fourth quarter with cash and cash equivalents balance of $1.03 billion compared with $807.1 million in the prior quarter. Long-term debt at the end of the quarter was $1.01 billion, compared with $983.2 million in the preceding quarter.

The company generated $319 million of cash from operating activities and Capex was $16.7 million in the quarter. ManpowerGroup repurchased $51 million of common stock and paid out dividends of $64.1 million in the quarter.

First-Quarter 2020 Outlook

The company expects revenues to be down 2% to flat on a constant-currency basis. It anticipates income tax rate in the first quarter to be around 35.5%.

Zacks Rank &Stocks to Consider

ManpowerGroup currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Waste Management (WM - Free Report) , S&P Global SPGI and Fidelity National Information Services FIS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings (three to five years) growth rate for Waste Management, S&P Global and Fidelity National Information Services is estimated at 8.2%, 10% and 8.9%, respectively.

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