Sales Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $17.54 billion in revenue over the past 12 months, ManpowerGroup is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s challenging to maintain high growth rates when you’ve already captured a large portion of the addressable market. For ManpowerGroup to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.

As you can see below, ManpowerGroup’s demand was weak over the last five years. Its sales fell by 3% annually, a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. ManpowerGroup’s recent performance shows its demand remained suppressed as its revenue has declined by 5% annually over the last two years.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, ManpowerGroup’s organic revenue averaged 3.4% year-on-year declines. Because this number is better than its normal revenue growth, we can see that some mixture of divestitures and foreign exchange rates dampened its headline results.

This quarter, ManpowerGroup’s revenue fell by 7.1% year on year to $4.09 billion but beat Wall Street’s estimates by 2.9%.

Looking ahead, sell-side analysts expect revenue to decline by 3% over the next 12 months. Although this projection is better than its two-year trend, it's tough to feel optimistic about a company facing demand difficulties.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

ManpowerGroup was profitable over the last five years but held back by its large cost base. Its average operating margin of 2% was weak for a business services business.

Looking at the trend in its profitability, ManpowerGroup’s operating margin might fluctuated slightly but has generally stayed the same over the last five years, which doesn’t help its cause.

This quarter, ManpowerGroup’s breakeven margin was in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for ManpowerGroup, its EPS declined by 19.7% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

In Q1, ManpowerGroup reported EPS at $0.12, down from $0.81 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects ManpowerGroup’s full-year EPS of $2.31 to grow 75.9%.

Key Takeaways from ManpowerGroup’s Q1 Results

We liked that ManpowerGroup beat analysts’ organic revenue expectations this quarter, leading to a revenue beat. On the other hand, both its EBITDA and EPS missed. Looking ahead, EPS guidance for next quarter missed significantly. Overall, this was a weaker quarter. The stock traded down 8.2% to $45.41 immediately after reporting.

ManpowerGroup’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free .