Manpower (NYSE:MAN) is witnessing an improvements of trends in Europe, an event with significant impact on a company with 65% of its revenues coming from across the Atlantic and which had its stock fall to the $40s after being in the $70s just a couple years ago as the European debt situation worsened, says John Healy, Managing Director and Equity Research Analyst at Northcoast Research Holdings, LLC.
“If you look at the growth rate and the trajectory of the growth rates, or rather the growth declines in Europe, they’re starting to look like the numbers might become — what I would say are less bad — so revenue trends are no longer what I would say are decelerating. I anticipate that to occur probably in the first quarter, which is typically a good sign and a good opportunity to begin to buy the stock of Manpower or any staffing firm — when the industry trends start to appear like they’re no longer decelerating, and the next moves might be up rather than down. I think we’re on the cusp of seeing that with Manpower,” Healy said.
Healy says the market has already priced the European decline into MAN‘s stock, and he says the company engaged in improving its agility and go-to-market strategy, which he expects will result in improved profits over the long run. The company has also been repurchasing its own stock, and investing in its Experis brand.
“In 2013, I see Manpower as an outperformer for four reasons: revenue trends that look less bad, a valuation that is very attractive relative to its peers, successful initiatives to improve the cost structure of the company and the opportunity to improve mix associated with the furthering of the launch of the Experis brand,” Healy said.
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