Manpower Group (MAN) is a premier global staffing firm with broad reach and extensive job networks; the stock was a Top Pick at the start of the year and has risen 37% since, notes John Buckingham, money manager, value investor and editor of The Prudent Speculator.

The potency of its job placement business has helped the company branch out into all aspects of human resources and position itself as a strategic partner for a host of multinational and local firms.

No doubt, the pandemic made for a difficult 2020 for companies in Manpower’s line of work as jobs were cut and staffing levels were reduced, but as MAN provides services such as temporary staffing, permanent placement, workforce training and outplacement, the future looked bright with so much labor in transition.

And, as occurred following the Great Financial Crisis and the deep recession that resulted, we believed that MAN shares were poised to rebound as a return toward normalcy, thanks to the vaccines, would lead to a significant boost for its services, given a much stronger global economy and the resultant hiring bounce.

Happily, business improved much quicker than even our optimistic view had envisioned, as the company turned in Q1 profits of $1.11 per share, blowing away the consensus analyst projection of $0.67. Revenue and gross profit returned to growth year over year, increasing 1% on a constant currency basis while operating margins improved 120 basis points.

Of its geographical segments, Southern Europe (MAN’s largest territory, commanding 44% of revenue) showed the most improvement with revenue from Italy rising 12.5%.

Management also continued to focus on speeding collections, improving the time between billing and collecting for payment by 3.7 days versus the same period last year.

We continue to think that MAN’s broad geographic footprint, wide range of offerings and shifts to recruitment outsourcing will provide a ramp as business conditions continue to improve, and as organizations move to retrain existing employees for the changing landscape as well as hire new ones.

Shares are still attractively priced, given respective EPS estimates of $6.25, $7.97 and $10.32 this year, next year and in 2023. The stock also boast a 2.0% dividend yield and our target price has been raised to $143. We continue to rate MAN as a “Buy.”

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