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Category: Stock Market and ManpowerGroup
Date: 17 October 2019 Stock Price: $84.04 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of ManpowerGroup, a leading global workforce solutions company active across 80 countries.
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About ManpowerGroup
ManpowerGroup® (NYSE: MAN), the leading global workforce solutions company, helps organizations transform in a fast-changing world of work by sourcing, assessing, developing and managing the talent that enables them to win. We develop innovative solutions for hundreds of thousands of organizations every year, providing them with skilled talent while finding meaningful, sustainable employment for millions of people across a wide range of industries and skills. Our expert family of brands – Manpower®, Experis®, Right Management® and ManpowerGroup® Solutions – creates substantially more value for candidates and clients across 80 countries and territories and has done so for 70 years. In 2019, ManpowerGroup was named one of the World's Most Ethical Companies for the tenth year and one of Fortune's Most Admired Companies for the seventeenth year, confirming our position as the most trusted and admired brand in the industry
Overview of ManpowerGroup's latest earnings report
The data provided below refers to the latest quarter's data unless specified otherwise
- Total revenue $5.373 billion (down from $5.656 billion from the same quarter of the previous year)
- Total revenue decreased by -5% over the last 12 months
- Cost of services: $4.502 billion (down from $5.734 billion for the same quarter of the previous year)
- Cost of services decreased by-4.9% over the last 12 months
- Net income: $127.3 million (up from $143.3 million for the same quarter of the previous year)
- Diluted earnings per share: $2.11 (down from $2.17 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 60.4 million (down from 66.1 million for the same quarter of the previous year)
- Cash and cash equivalents: 770.4 million
- Cash and cash equivalents per share: $12.75
- Cash and cash equivalents makes up 4.5% of ManpowerGroup's market capital
- Cash and cash equivalents makes up 8.5% of ManpowerGroup's total assets
- Accounts receivable: $5.415 billion
- Accounts receivable makes up 59.8% of ManpowerGroup's total assets
- Stockholders equity of ManpowerGroup: $2.694 billion
- Stockholders equity per share: $44.6
- So ManpowerGroup is trading at 1.89 times its stockholders equity per share which is just outside the expected range of between 2 and 4 times that most firms tend to trade at.
- Cash generated from operations: $277 million
- Cash generated from operations per share: $4.59
ManpowerGroup's management commentary on the results and earnings guidance
MILWAUKEE, July 19, 2019 /PRNewswire/ -- ManpowerGroup (NYSE: MAN) today reported net earnings of $2.11 per diluted share for the three months ended June 30, 2019 compared to $2.17 per diluted share in the prior year period. Net earnings in the quarter were $127.3 million compared to $143.4 million a year earlier. Revenues for the second quarter were $5.4 billion, a 5% decline from the prior year period. The current year quarter included special items consisting of a non-cash accounting gain of $80 million related to the purchase of our remaining interest in the Switzerland Manpower business, which increased earnings per share by $1.32, and a goodwill impairment charge and related tax and other costs of $76 million, which decreased earnings per share by $1.26. Financial results in the quarter were also impacted by the stronger U.S. dollar relative to foreign currencies compared to the prior year period. On a constant currency basis, revenues were flat. On a constant currency basis, net earnings per diluted share increased 1% and decreased 8%, excluding the impact of the special items and restructuring charges in the prior year. Earnings per share in the quarter were negatively impacted 8 cents by changes in foreign currencies compared to the prior year, or 11 cents excluding the special items.
Jonas Prising, ManpowerGroup Chairman & CEO, said, "We delivered solid results in the second quarter, reflecting the significant variations we are seeing across global labor markets. We are making operational and strategic progress and continue to invest in technology for every stage of the HR value chain as this remains core to everything we do today and in the future. As skills shortages continue to be felt by many employers, demand for our extensive portfolio of workforce solutions and services across our global footprint continues to provide us with opportunities for profitable growth in many markets." "We anticipate diluted earnings per share in the third quarter will be between $1.88 and $1.96, which includes an estimated unfavorable currency impact of 4 cents and an estimated unfavorable impact from the expected French corporate tax rate change for 2019 of 5 cents."
On July 10, 2019, our joint venture in Greater China, ManpowerGroup Greater China Limited, successfully completed its initial public offering on the Hong Kong Stock Exchange which will result in the deconsolidation of the business. During the quarter we recorded $60 million of goodwill impairment and a discrete tax charge of $10 million related to our Germany business and a charge of $6 million for goodwill impairment and additional costs related to our New Zealand business. Net earnings for the six months ended June 30, 2019 were $180.8 million, or $2.98 per diluted share compared to net earnings of $240.4 million, or $3.62 per diluted share in the prior year. The year to date period included special items and restructuring costs which reduced earnings per share by 46 cents. The prior year-to-date period included restructuring costs which reduced earnings per share by 45 cents. Revenues for the six-month period were $10.4 billion, a decrease of 7% from the prior year or a decrease of 1% in constant currency. Earnings per share for the six-month period were negatively impacted 15 cents by changes in foreign currencies compared to the prior year, or 23 cents excluding the special items and restructuring costs.
Jonas Prising, ManpowerGroup Chairman & CEO, said, "We delivered solid results in the second quarter, reflecting the significant variations we are seeing across global labor markets. We are making operational and strategic progress and continue to invest in technology for every stage of the HR value chain as this remains core to everything we do today and in the future. As skills shortages continue to be felt by many employers, demand for our extensive portfolio of workforce solutions and services across our global footprint continues to provide us with opportunities for profitable growth in many markets." "We anticipate diluted earnings per share in the third quarter will be between $1.88 and $1.96, which includes an estimated unfavorable currency impact of 4 cents and an estimated unfavorable impact from the expected French corporate tax rate change for 2019 of 5 cents."
On July 10, 2019, our joint venture in Greater China, ManpowerGroup Greater China Limited, successfully completed its initial public offering on the Hong Kong Stock Exchange which will result in the deconsolidation of the business. During the quarter we recorded $60 million of goodwill impairment and a discrete tax charge of $10 million related to our Germany business and a charge of $6 million for goodwill impairment and additional costs related to our New Zealand business. Net earnings for the six months ended June 30, 2019 were $180.8 million, or $2.98 per diluted share compared to net earnings of $240.4 million, or $3.62 per diluted share in the prior year. The year to date period included special items and restructuring costs which reduced earnings per share by 46 cents. The prior year-to-date period included restructuring costs which reduced earnings per share by 45 cents. Revenues for the six-month period were $10.4 billion, a decrease of 7% from the prior year or a decrease of 1% in constant currency. Earnings per share for the six-month period were negatively impacted 15 cents by changes in foreign currencies compared to the prior year, or 23 cents excluding the special items and restructuring costs.
ManpowerGroup (NYSE: MAN) stock price history
The image below, obtained from Google, shows the stock price history of ManpowerGroup (NYSE: MAN) for the last 5 years. And it's been a decent time for ManpowerGroup stockholders. 5 years ago ManpowerGroup was trading at around $61 and its currently trading at $84.04. So the stock has grown by 46% over the last 5 years.
While its not bad the opportunity cost of holding the stock is pretty high when one looks as the strong growth over the last 5 years some of the othe stock we valued recently showed, with a large number of companies having grown by well over 100% over a 5 year period, for example Netflix that increased by over 300% over the last 5 years. The stock of ManpowerGroup is trading at close to the midpoint between its 52 week low and its 52 week low, which to us is a clear indication that the short term momentum and sentiment of the stock of ManpowerGroup is neutral.
While its not bad the opportunity cost of holding the stock is pretty high when one looks as the strong growth over the last 5 years some of the othe stock we valued recently showed, with a large number of companies having grown by well over 100% over a 5 year period, for example Netflix that increased by over 300% over the last 5 years. The stock of ManpowerGroup is trading at close to the midpoint between its 52 week low and its 52 week low, which to us is a clear indication that the short term momentum and sentiment of the stock of ManpowerGroup is neutral.
Recent coverage of ManpowerGroup
The extract below discusses ManpowerGroup in more as obtained from TheStreet.com. It was published on 20 September 2019
A study of analyst recommendations at the major brokerages shows that ManpowerGroup Inc (MAN - Get Report) is the #98 broker analyst pick among those stocks screened by The Online Investor for strong stock buyback activity. To make that list, a stock must have repurchased at least 5% of its outstanding shares over the trailing twelve month period. In forming the rank, the analyst opinions from the major brokerage houses were tallied, and averaged; then, the list of stocks with strong buyback activity was ranked according to those averages.
Investors are often keenly interested in knowing which companies are buying back their own stock, because companies often will only make such a move if they feel their stock is undervalued. ManpowerGroup Inc is a company with strong buyback activity that is also considered a compelling buy by analysts; a bullish investor could take this to mean that sharp analyst minds came to the same bullish conclusion as the company itself that the stock is a good value, and therefore the stock should do well in the future.
A study of analyst recommendations at the major brokerages shows that ManpowerGroup Inc (MAN - Get Report) is the #98 broker analyst pick among those stocks screened by The Online Investor for strong stock buyback activity. To make that list, a stock must have repurchased at least 5% of its outstanding shares over the trailing twelve month period. In forming the rank, the analyst opinions from the major brokerage houses were tallied, and averaged; then, the list of stocks with strong buyback activity was ranked according to those averages.
Investors are often keenly interested in knowing which companies are buying back their own stock, because companies often will only make such a move if they feel their stock is undervalued. ManpowerGroup Inc is a company with strong buyback activity that is also considered a compelling buy by analysts; a bullish investor could take this to mean that sharp analyst minds came to the same bullish conclusion as the company itself that the stock is a good value, and therefore the stock should do well in the future.
ManpowerGroup (NYSE: MAN) latest stock valuation
So based on the 2nd quarter 2019 earnings report of ManpowerGroup (NYSE: MAN) what do we value ManpowerGroup stock at? Based on the earnings report released by the group our valuation model provides a target (full value) price for ManpowerGroup at $127.20 a stock. We therefore believe the stock of ManpowerGroup is undervalued.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target (full value) price of $127.20. Therefore we believe a good entry point into ManpowerGroup is at $115.10 or below. Since ManpowerGroup is trading at well below our recommended entry point into ManpowerGroup we rate the stock of ManpowerGroup as a buy.
We expect the stock price of ManpowerGroup to climb to levels closer to our valuation levels in coming weeks and months unless their earnings release of tomorrow, 18 October 2019 surprises significantly to the downside.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target (full value) price of $127.20. Therefore we believe a good entry point into ManpowerGroup is at $115.10 or below. Since ManpowerGroup is trading at well below our recommended entry point into ManpowerGroup we rate the stock of ManpowerGroup as a buy.
We expect the stock price of ManpowerGroup to climb to levels closer to our valuation levels in coming weeks and months unless their earnings release of tomorrow, 18 October 2019 surprises significantly to the downside.
Next earnings release of ManpowerGroup
It is expected that the 3rd quarter earnings release of ManpowerGroup will be released on Friday the 18th of October 2019