KELYA Kelly Services Inc

Manpower Group (MAN) – a leading global company in flexible staffing services – is slated to release its third quarter 2012 financial results on Friday, October 19, 2012.

The current Zacks Consensus Estimate for the quarter stands at 68 cents per share, indicating an estimated year-over-year decrease of about 30%. The estimate lies between a low of 63 cents to a high of 72 cents. Revenue, as per the Zacks Consensus Estimate, is pegged at $5,106 million.

Second-Quarter Recap

Manpower’s second- quarter 2012 earnings came in at 76 cents a share, which dropped 12.6% from 87 cents earned in the prior-year quarter. However, it surpassed the Zacks Consensus Estimate of 72 cents. Unfavorable foreign currencies fluctuation undermined the earnings by 7 cents.

Milwaukee, Wisconsin-based Manpower said that the quarter’s total revenue of $5,206.7 million fell 8.1% from the prior-year quarter and 0.8% in constant currency. The revenue also fell short of the Zacks Consensus Estimate of $5,224 million.

(Read full report on earnings: Manpower Profit Dips)

Agreement of Estimate Revision

For the to-be-reported quarter, the estimates remain more or less unchanged with only one estimate going up (out of 13) over the last 30 days, while none of the estimates moved downwards. No revisions were noticed in the last 7 days.

For 2012, out of 13 estimates it was observed that three estimate was revised upwards whereas one estimate was trimmed over the last 30 days. Further, one estimate was moved up as well as one went down in the last 7 days.

Magnitude of Estimate Revision

For the third quarter 2012, the estimate remains stagnant at 68 cents over the last 7 or 30 days mainly due to the absence of any news affecting the estimates directly or indirectly, whereas for 2012, the estimate went up by a penny to $2.68 per share over the last 30 days.

Positive Earnings Surprise History

With respect to earnings surprise, Manpower has topped the Zacks Consensus Estimate over the last four quarters with an average of 15.8%. The earnings surprise over the last four quarters lies between a low of 2.1% and a high of 42.9%.

Conclusion

The employment services industry is highly competitive with limited barriers to entry, and Manpower faces stiff competition in both domestic and international markets from other established players, such as Kelly Services Inc. (KELYA) and Robert Half International Inc. (RHI). An intense competition may limit the company’s market share and profitability.

Manpower’s significant international presence exposes it to unfavorable foreign currency fluctuations, which may adversely impact its top and bottom-line results.

As a result, we maintain our long-term ‘Underperform’ recommendation on the stock. Manpower carries a Zacks #3 Rank implying short-term Hold rating on the stock for the next 1-3 months.

 
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