ManpowerGroup Posts Strong Q1 Earnings - Analyst Blog

Shares of ManpowerGroup Inc. MAN rose nearly 7% in the pre-market trading session as the company posted better-than-expected first-quarter 2014 results. Earnings per share came in at 86 cents, which handily beat the Zacks Consensus Estimate of 67 cents and increased substantially year over year.

Consistently strong performances across all major regions, along with effective cost management were the primary growth drivers.

Revenues & Margins

Total revenue rose 2.8% (up 3.0% in constant currency) year over year to $4,904.0 million, based on robust regional performances. Moreover, reported revenues came ahead of the Zacks Consensus Estimate of $4,836.0 million.

Gross profit increased 3.3% (up 3.6% in constant currency) to $816.5 million due to higher revenues, partly offset by a rise in cost of services. Gross margin remained almost unchanged at 16.6%.

ManpowerGroup posted operating profit of $126.9 million, which rose more than twofold from the prior-year quarter.

Selling and administrative expenses fell 6.3% (down 6.1% on constant currency) to $689.6 million.

Operating Groups

By geographic segments, revenues from the United States grew 2.1% year over year to $720.5 million. The segment's operating profit increased 81.2% to $13.4 million from the prior-year quarter.

In Other Americas, revenues decreased 9.4% (but grew 3.6% in constant currency) to $350.6 million while the segment's operating profit rose 43.8% (up 64.6% in constant currency) to $12.6 million.

In France, revenues rose 6.3% year over year (up 2.3% in constant currency) to $1,217.3 million while the segment's operating profit increased 72.0% (up 65.0% in constant currency) to $51.2 million.

In Italy, revenues increased 6.5% year over year (up 2.5% in constant currency) to $274.7 million. The segment's operating profit rose 7.8% (up 3.4% in constant currency) to $12.6 million.

In Other Southern Europe, revenues increased 18.9% (up 14.7% in constant currency) to $230.0 million from the year-ago quarter. The segment's operating profit rose 97.5% (up 90.0% in constant currency) to $4.6 million.

In Northern Europe, revenues rose 6.8% (up 4.6% in constant currency) to $1,463.9 million while operating profit increased over fourfold to $38.4 million, both on a year-over-year basis.

In APME (Asia Pacific Middle East), revenues came in at $573.7 million, down 9.3% (down 1.1% in constant currency) year over year. The segment's operating profit came in at $20.2 million, up 38.1% (up 52.4% in constant currency) from the prior-year quarter.

Revenues from Right Management decreased 4.3% (down 4.0% in constant currency) year over year to $73.3 million. The company posted operating income of $8.3 million, up substantially from the year-ago quarter.

Other Financial Details

ManpowerGroup ended the quarter with cash and cash equivalents of $696.5 million, total debt of $529.7 million, which reflected a debt-to-capitalization ratio of 15.1% and shareholders' equity of $2,975.8 million.

Moreover, ManpowerGroup incurred a capital expenditure of $8.3 million during the quarter.
 
Guidance

ManpowerGroup now expects second-quarter 2014 earnings per share in the range of $1.26 to $1.34. The Zacks Consensus Estimate for second-quarter 2014 stands at $1.21.

With a well-established network in about 80 countries, Manpower currently provides services to about 400,000 clients. We believe that the company's brand value, broad range of services and a strong global footprint provide it a competitive edge over peers.

Currently, Manpower carries a Zacks Rank #2 (Buy). Some other better ranked stocks in the same sector include On Assignment Inc. ASGN, CTPartners Executive Search Inc. CTP, Korn/Ferry International KFY. While On Assignment sports a Zacks Rank #1 (Strong Buy), CTPartners and Korn/Ferry International have the same Zacks Rank as ManpowerGroup.