We're only a week into earnings season, and the torrent of news already seems endless. But tired or not, investors would do themselves a disservice tomorrow by missing one company's news in particular. Before the markets open for trading, temporary-employment company Manpower (NYSE:MAN) will release its news and views on, respectively, its performance in Q4 and the entirety of 2005, and its outlook for the year to come. It's good to pay attention because when an employment company like Manpower does well, you can probably expect good things for the economy as a whole. Manpower's news, in other words, has import far beyond the company's own borders.

Wall Street Wisdom:

  • General consensus. Of the 15 analysts following Manpower, two-thirds of them rate the stock a "buy," and the rest counsel a "hold."
  • Revenues. Yet the analysts don't expect to see a whole lot of improvement in the company's revenues. In fact, their prediction of $4.1 billion represents less than a 1% improvement over the year-ago quarter's numbers.
  • Earnings. Not so with profits, however. The consensus of analysts polled is that in Q4 2005, Manpower boosted profits by 16% to $0.85 per share.

Margin watch:
Reviewing the company's recent performance in transforming top-line sales into bottom-line profits, I see little encouragement in regard to the economy.

Margins %

6/04

9/04

12/04

3/05

6/05

9/05

Gross

18.2

18.5

18.7

18.6

18.5

18.4

Op.

2.4

2.6

2.7

2.6

2.6

2.6

Net

1.4

1.6

1.6

1.6

1.6

1.5

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Gross margins improved for a time but are now trending downward. Operating and net margins have been flatlined for more than a year. Let's hope tomorrow shows something other than a continuation of this status quo.

Valuation metrics:
Priced at a 19 times multiple to earnings and 20 times free cash flow, Manpower isn't the cheapest company on the planet. Still, I can't help noticing that it's priced at a lower multiple than rivals such as Spherion (NYSE:SFN) and Kelly (NASDAQ:KELYA), despite possessing a stronger operating margin than either of these two.

Fool contributorRich Smithdoes not own shares of any company named above.