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ManpowerGroup's (MAN) Q1 Earnings: What's in the Cards?

ManpowerGroup Inc. MAN is set to report first-quarter 2016 results before the opening bell on Apr 21, 2016. In the fourth quarter, the company surpassed the Zacks Consensus estimate by 9.9%. Notably, the company beat the Zacks Consensus Estimate in each of the last four quarters, with an average earnings surprise of 9.9%. However, it remains to be seen if the company will be able to keep its earnings streak alive in this quarter as well.

Earnings Whispers

Our proven model does not conclusively show that ManpowerGroup is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Sell) for this to happen.

Zacks ESP: ManpowerGroup has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 92 cents.

Zacks Rank: The company sports a Zacks Rank #1 (Strong Buy) which increases the predictive power of the ESP. However, a 0.00% ESP makes a surprise prediction difficult.

Factors Influencing This Quarter

Dwindling health of the Chinese economy and slowdown in the global markets may not bode well for the company. Revenue growth in the Americas, Northern Europe and Asia Pacific Middle East (APME) is expected to remain flat sequentially, while Southern Europe revenue growth rate might be lower than that in the fourth quarter of 2015.

Management is focusing on internal drivers like disciplined pricing and tough control on productivity to ensure uninterrupted profits. Previously, the company had acquired 7S Group in Germany as well as Greythorn divisions in Australia and Singapore. Moreover, it acquired the desk-side and end user support division of Atos, through Proservia, its French subsidiary. We believe these acquisitions will drive the company’s top line higher.

The strengthening U.S. dollar will continue to affect ManpowerGroup’s quarterly performance as nearly 85% of its revenues is derived from international markets. Notably, currency volatility had a 16 cent per share negative impact on fourth-quarter earnings. Revenues, too, fell nearly 3.3% to $4,953.9 million due to the adverse currency impact. Management expects currency fluctuations to have an unfavorable effect on the top and bottom line. Foreign currency headwind is likely to hurt revenue growth by 4% and earnings by 4 cents per share during the first quarter of 2016.

Stocks that Warrant a Look

Here are some other companies which you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

McDonald's Corp. MCD has an Earnings ESP of +1.74% and a Zacks Rank #2.

Lithia Motors Inc. LAD has an Earnings ESP of +0.65% and a Zacks Rank #2.

Cabela's Incorporated CAB has an Earnings ESP of +10.81% and a Zacks Rank #3.

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