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