A month has gone by since the last earnings report for ManpowerGroup (MAN - Free Report) . Shares have added about 5.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Manpower due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
ManpowerGroup Misses Q1 Earnings Estimate
ManpowerGroup reported mixed first-quarter 2020 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same.
Quarterly adjusted earnings of 71 cents per share missed the Zacks Consensus Estimate by 2.7% and slumped 48.9% year over year.
Revenues of $4.62 billion beat the consensus estimate by 13.4%. The figure, however, declined 8.4% year over year on a reported basis and 5.9% on a constant-currency basis. The decline reflects impact of the coronavirus-related work restrictions in the company’s largest markets.
Revenues from America totaled $1.01 billion, down 1.9% year over year on a reported basis but up 1.2% on a constant-currency basis. In the United States, revenues came in at $610.9 million, down 2%, both on reported and constant-currency basis. In the Other Americas subgroup, revenues of $400.1 million decreased 1.7% on a reported basis but improved 6.1% on a constant-currency basis. Americas contributed 22% to total revenues.
Revenues from Southern Europe were down 7.8% on a reported basis and 5.5% on a constant-currency basis to $1.94 billion. Revenues from France came in at $1.09 billion, down 16.2% on a reported basis and 13.7% on a constant-currency basis. Revenues from Italy were $327.7 million, down 8% on a reported basis and 5.3% on a constant-currency basis. The Other Southern Europe subsegment generated revenues of $523.2 million, up 17.2% on a reported basis and 18.3% on a constant-currency basis. Southern Europe contributed 42% to total revenues.
Northern Europe revenues slid 11% on a reported basis and 7.9% on a constant-currency basis to $1.07 billion. The segment accounted for 23% of total revenues in the quarter.
APME revenues totaled $594.9 million, down 15.7% on a reported basis and 14% on a constant-currency basis. The segment contributed 13% to total revenues.
Gross profit in the quarter was $724 million, down 10% year over year on a reported basis and 7.7% on a constant-currency basis. Gross profit margin came in at 15.7%, down 30 basis points (bps) year over year.
Operating profit of $37.7 million plummeted 64.2% year over year on a reported basis and 62.7% on a constant-currency basis. Operating profit margin came in at 0.8%, down 127 bps year over year.
Balance Sheet and Cash Flow
ManpowerGroup exited the first quarter with cash and cash equivalents balance of $1.1 billion compared with the prior quarter’s $1.03 billion. Long-term debt at the end of the quarter was $995.6 million compared with the $1.01 billion witnessed in the preceding quarter.
The company generated $181 million of cash from operating activities, and Capex was $9.1 million in the quarter. ManpowerGroup repurchased $63.8 million of common stock in the quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -92.34% due to these changes.
At this time, Manpower has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Manpower has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.