Manpower, Inc. (MAN) exhibited strong earnings growth in 2006 and 2007. In the first two quarters of 2008, earnings exceeded expectations by a cumulative $0.14. Our Buy rating on the shares is maintained.
Strong cash flow allows management to return value to shareholders in the form of share repurchases. In 2007, Manpower generated a 22% improvement in free cash flow, up to $341 million and repurchased 6.1 million shares for $430.5 million. During the first half of 2008, the company repurchased $52.7 million worth of its shares.
In the first quarter of 2008, management made three strategic acquisitions in order to grow and expand its RPO business and expand its global network, especially in emerging markets. Manpower continues to execute its key strategies of elevating and broadening client relationships while improving efficiency through speed and quality. The company also provides assistance and employment strategies to HR managers as they seek skilled employees to fulfill permanent, temporary and contract positions. Manpower provides employee training and outplacement services.
Manpower is currently trading at 8.8 times trailing 12 month earnings. Over the last five years, Manpower stock has traded in a P/E range of 8.5 to 30; however, the stock has traded at a P/E multiple above 24 only during periods of cyclical earnings decline. The company has generated strong revenue and earnings growth since 2006 through the second quarter of 2008. The target of $76.50 is based on a 14 P/E on trailing 12 month earnings.
Read the full analyst report on MAN
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