On Friday, Truist Securities revised its price target for Manpower Inc . (NYSE:MAN) shares, a leading workforce solutions company, decreasing it to $74 from the previous target of $78, while keeping a Hold rating on the stock.
The adjustment follows Manpower's fourth-quarter revenue guidance, which aligns with current market expectations, but is overshadowed by the anticipation of weaker demand in Northern Europe. This regional outlook is part of the reasoning behind the company's earnings per share (EPS) guidance falling below consensus.
The analyst from Truist Securities highlighted that the preliminary budget in France could introduce a higher tax rate in the years 2024 and 2025, presenting an additional financial challenge for Manpower. This concern, along with the demand issues in Northern Europe, has contributed to a 10% decline in the company's stock value.
In terms of financial projections, Truist Securities expects Manpower to experience approximately flat EBITDA (earnings before interest, taxes, depreciation, and amortization) growth in 2025. However, the firm anticipates a more robust growth of around 30% in EBITDA for the year 2026. Despite these projections, the firm maintains its Hold rating on the stock.
The analyst's statement provided an overview of the factors influencing the revised price target: "Despite 4Q revenue guidance being in-line with the street, Northern Europe demand is expected to be weak which contributed to a below consensus EPS guide.
The French preliminary budget poses an additional risk for a higher tax rate in 2024/5. Such factors contributed to the stock down 10%. We estimate flattish 2025 EBITDA growth, but ~30% growth in 2026. We maintain our Hold rating and lower our price target to $74 (prior $78), and adjust our estimates."
The revised price target and financial outlook for Manpower reflect the firm's assessment of the company's near-term challenges and longer-term growth potential, as well as the broader economic factors that may impact its performance.
In other recent news, ManpowerGroup (NYSE:MAN) experienced a 2% year-over-year revenue decline in the third quarter of 2024, with total revenue reaching $4.5 billion. The company's adjusted EBITA saw a 2% increase, standing at $117 million, while adjusted earnings per share fell by 8% year-over-year to $1.29. These developments are part of recent trends within the company.
ManpowerGroup anticipates similar revenue trends in the fourth quarter, with continued challenges, particularly in Northern Europe. The company forecasts earnings per share between $0.98 and $1.08 for Q4, and an expected organic revenue decline of 1% to 5%.
Despite the decline in key markets like France, Italy, UK, and Germany, there were positive developments. The company's Talent Solutions revenue increased by 7%, and there was growth in the Asia-Pacific, Middle East segment by 3%, primarily driven by Japan's 9% revenue increase.
The company continues to focus on increasing sales activities and managing costs, particularly in Northern Europe. Despite the challenges, ManpowerGroup remains optimistic about future demand, especially in digital transformation, and believes it is well-positioned to capitalize on the eventual recovery in the staffing industry.
InvestingPro Insights
To complement the analysis provided by Truist Securities, InvestingPro data offers additional insights into Manpower Inc.'s financial position. Despite the challenges highlighted in the article, Manpower boasts a robust dividend yield of 4.59%, which may appeal to income-focused investors. This is further supported by an InvestingPro Tip noting that the company has maintained dividend payments for 31 consecutive years, demonstrating a strong commitment to shareholder returns.
Another InvestingPro Tip reveals that Manpower is trading near its 52-week low, which could present a potential opportunity for value investors, especially considering the company's P/E Ratio (Adjusted) of 18.09 for the last twelve months as of Q3 2024. This valuation metric suggests a more reasonable pricing compared to the unadjusted P/E of 95.28 mentioned in the article.
It's worth noting that InvestingPro has 11 additional tips available for Manpower, offering a more comprehensive analysis for investors seeking deeper insights into the company's prospects.
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