The United States and Europe are experiencing difficult times, but positive business trends in Asia, the Middle East, and Latin America are helping to offset this. This is because these countries' customers are constantly looking to fill permanent positions in strategically important areas of their businesses. Despite the slowdown and "looming recession," MAN's permanent placement business is booming in many of its largest markets outside the United States, including the United Kingdom, France, Italy, Japan, Spain, and the Nordic countries. I'd like to highlight the positives that have occurred thus far that lend credence to a long-term bull case before diving into the specific drawbacks. Therefore, I am changing my rating to neutral for the foreseeable future. While I remain optimistic about the company's long-term prospects, it may be prudent to wait for the MAN share price to drop even further before loading up. I am now more worried that the near-term share price will be significantly impacted by the short-term weakness due to the new guidance and persistently high inflation in the Europe region. As a result, 2Q23 forecasts for France predict a similar dip in income. While sales in France were above expectations in 1Q23, management noted that the trend was flattening out, if not declining, as the quarter came to a close. This is expected to be similar or slightly higher in the US compared to the decline in revenue experienced in the 1Q23. The main point of focus for 1Q23 is the forecast that 2Q23 revenues will decrease by 3% in an organic, currency-neutral basis at the middle point of the guided range. Fortunately, gross margin held steady in 1Q23 at 18.2%, but I anticipate it will start to decline in the coming quarters as we approach the lap of record high permanent recruitment activity in 2022. In 1Q23, organic fx-neutral same day basis revenue was down 4% y/y, with the largest decline occurring in the United States (-13% y/y). When considering other growth metrics, MAN did not fare any better. Although MAN's adjusted EPS of $1.61 for the 1Q23 was only slightly below expectations, the company's guidance for 2Q23 has caused consensus to lower their earnings guidance for the full year (consensus EPS went from ~1.82 to ~1.62, a 11% revision). My buy rating for ManpowerGroup ( NYSE: MAN) comes to test this 1Q23. Delmaine Donson/E+ via Getty Images Summary
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