ManpowerGroup Earnings: Margins SUFFER for Five Quarters Straight, Profit Drops

ManpowerGroup (NYSE:MAN) reported its results for the second quarter. Manpower is in the employment services industry whose five brands are Manpower, Manpower Professional, Elan, Jefferson Wells, and Right Management. The company provides a range of services for the entire employment and business cycle.

Investing Insights: Is TV the Next Bullish Catalyst for Apple’s Stock?

ManpowerGroup Earnings Cheat Sheet

Results: Net income for ManpowerGroup fell to $41 million (51 cents per share) vs. $72.7 million (87 cents per share) a year earlier. This is a decline of 43.6% from the year-earlier quarter.

Revenue: Fell 8.2% to $5.2 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: ManpowerGroup fell short of the mean analyst estimate of 72 cents per share. Analysts were expecting revenue of $5.21 billion.

Quoting Management: ManpowerGroup Chairman and CEO Jeffrey A. Joerres, said, “The second quarter underscored our ability to execute well in a difficult environment. It was a quarter in which we experienced mild but steady declines in revenue throughout the quarter. Europe, which comprises 65% of our business, not surprisingly experienced the most decline in the quarter.”Our investments and execution in our Solutions business continued to generate strong revenue and earnings as well as contribute to our goal of gross margin expansion.”We are anticipating the third quarter of 2012 diluted earnings per share to be in the range of 64 to 72 cents, which includes an estimated unfavorable currency impact of 8 cents,” Joerres stated.

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.5 percentage point to 16.4% from the year-earlier quarter. Over that time, margins have contracted on average 0.4 percentage point per quarter on a year-over-year basis.

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the second quarter of the last fiscal year, which saw revenue rise 23.6%.

After beating analyst estimates for the two previous quarters, the company fell short of forecasts. In the first quarter, it topped the mark by 15 cents, and in the fourth quarter of the last fiscal year, it was ahead by 11 cents.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the third quarter is 80 cents per share, down from 89 cents ninety days ago. Over the past sixty days, the average estimate for the fiscal year has reached $2.84 per share, a decline from $3.01.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

Don’t Miss These Additional Hot Stories:

Will New Apple Products PUMP UP Shares?

Are Share Buybacks a Good Idea?

Is Now The Time to Buy This Depressed Dow Stock?