Are you a night owl? A shareholder in international HR powerhouse Adecco (NYSE:ADO)? If you answer yes to both those questions, then you're in luck. Not only does the company report its Q4 and full-year 2005 earnings tomorrow, but it does so at the unholy -- at least to East Coast morning people -- hour of one in the morning. Put a pot of coffee on for me, too, OK?

Wall Street Wisdom:

  • General consensus. Worldwide, 16 analysts track Swiss-based Adecco. Nine of them rate the stock a buy, four a hold, and three a sell.
  • Stateside, we only have two analysts watching Adecco. They both rate it a strong buy. But get this -- their target prices (at least as related by Yahoo! Finance,) call for the stock to rise less than 2% from its current value. Makes you think: What do they rate a company whose price they expect to fall? A "masochistic buy," maybe?
  • Revenues. Our local analysts don't seem to predict Adecco's quarterly performance for tomorrow. But they do think that there was an 11% rise in sales to $23.9 billion for the full year.
  • Earnings. The year's profits are believed to have done even better -- up 28% to $0.78 per share.

Margin watch:
Here's something you don't see every day. Adecco has had precisely the same gross margin, on a rolling basis, in every quarter (quarter to quarter, it has wobbled 10 basis points up, 10 basis points down every so often) for the last 18 months. Operating and net margins, fortunately, have been creeping upward. And with Adecco's net as low as it is, even the slightest margin improvement on the bottom line can turn modest revenue gains into spectacular growth in profits.

Margins

6/04

9/04

1/05

4/05

7/05

10/05

Gross

16.7%

16.7%

16.7%

16.7%

16.7%

16.7%

Op.

2.6%

2.7%

3.1%

3.3%

3.5%

3.5%

Net

1.7%

1.7%

1.9%

2.1%

2.1%

2.1%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

Foolish lookout:
Which is precisely what analysts are predicting tomorrow. On a net basis, Adecco is about 11% more profitable a business than it was a year ago, about 24% better than it was 18 months ago. Mate that boost in profitability with double-digit growth in revenues, and the company has a real shot at proving its analysts correct tomorrow (OK, tonight.)

Competitors:
To a greater or lesser extent, Adecco competes with professional staffing companies such as Manpower (NYSE:MAN) and Robert Half (NYSE:RHI). While its business model is different, it can also be called a competitor to Motley Fool Stock Advisor recommendation Resources Connection (NASDAQ:RECN).

Fool contributor Rich Smith does not own shares of any company named above.