ManpowerGroup Stock Gains 40% in 2019, Total Returns Turn Positive Over Trailing 12 Months (MAN)

ManpowerGroup, Inc. (NYSE:MAN) saw its share price lose more than half of its value in 2018 but, the trend reversed and the stock managed to recover all of those losses since the beginning of 2019.

After hitting its 10-year low in the aftermath of the 2008 financial crisis, the share price advanced more than five-fold and reached its all-time high in January 2018. However, the share price’s trend soon inverted and embarked on an 11-month decline.

While the average analyst’s recommendation is still between Hold” and “Buy”, the share price has 10% room on the upside before hitting the analysts’ current average target price of $100.20. Furthermore, after languishing below the 200-day moving average for nearly a year, the 50-day moving average has broken above its 200-day counterpart in early April and continues to rise. Additionally, the rising share price has remained securely above both moving averages, which implies a potential extension of the current uptrend deeper into the year.

The technical indicators reflect the company’s strong financial performance for all four periods last year. Furthermore, after beating all earnings expectations in 2018, the company started 2019 by outperforming Wall Street analysts’ earnings estimates again.

Financial Results

The financial report that was released on April 10, 2019 revealed a 9% decline in total revenue to $5 billion. First-quarter net earnings of $53.5 million also were lower than the $97.0 million figure from the same period last year. Earnings per share (EPS) declined from $1.45 last year to $0.88 for the current quarter. However, the current period included a charge of $0.51 per share for restructuring costs. Adjusted earnings per diluted share of $1.39 beat analysts’ earnings expectations by 2.2%.

In April 2019, ManpowerGroup completed the purchase of the remaining interest in the Switzerland ManpowerGroup franchise, which will add approximately $500 million to the company’s annual revenues. ManpowerGroup also repurchased $101 million of common stock in the first quarter to bolster its share price.

Additionally, the restructuring also lowered the cost run rate in markets with weaker demand, which positions ManpowerGroup for better results in the remaining periods of 2019. For the second quarter, the company anticipates earnings between $1.96 and $2.04 per diluted share, which includes a $0.10 estimated unfavorable currency impact.

ManpowerGroup, Inc. (NYSE:MAN)

Based in Milwaukee, Wisconsin and founded in 1948, ManpowerGroup Inc. provides workforce solutions and services in the Americas, Southern and Northern Europe, the Asia-Pacific and the Middle East. The company offers recruitment services, including permanent, temporary and contract recruitment of professionals. Additionally, the ManpowerGroup also offers administrative and industrial positions under the Manpower and Experis brands. The portfolio of available services also includes various assessment services, training and development services, career management and outsourcing services related to human resources functions primarily in the areas of large-scale recruiting and workforce-intensive initiatives. Furthermore, the company offers workforce consulting services, contingent staffing and permanent recruitment services, professional resourcing and project-based solutions in information technology, engineering and finance fields. Currently, ManpowerGroup offers and supports its services through a network of nearly 2,600 offices in 80 countries and territories.

Dividends

On May 10, 2019, ManpowerGroup declared a 7.9% increase to its semi-annual dividend from $1.01 to $1.09. The company will distribute the next round of dividend distributions on the June 14, 2019, pay date to all investor who claim stock ownership before the May 31, 2019, ex-dividend date.

The new $1.09 semi-annual dividend is equivalent to a $2.18 annualized distribution. This annual payout amount corresponds to a 2.38% forward dividend yield, which is 32.4% higher than the company’s own 1.8% yield average over the past five years. ManpowerGroup’s current yield outperformed the 1.99% average yield of the entire Services sector. Furthermore, the current 2.38% yield is in line with the simple average yield of only dividend-paying equities in the Staffing & Outsourcing Services segment, as well as 35% higher than the 1.77% average yield of all the companies in the segment.

ManpowerGroup paused its annual dividend boosts in 2009 and 2010. However, since resuming dividend hikes in 2012, the company has enhanced its annual payout amount nearly three-fold over the past nine years. This level of advancement corresponds to an average annual growth rate of 12.8%.

Additionally, even with a total of five missed dividend boosts since 1999, ManpowerGroup still managed to advance its total annual dividend payout nearly 11-fold. Coincidentally, this progress corresponds to an almost-identical annual growth rate of 12.7% per year over the past two decades.

Share Price

The share price entered the trailing 12-month period sliding down on the declining trend that began in January 2018. After losing a third of its value between the onset of the trailing 12 months and late December, the share price reached its 52-week low of $62.59 on December 24, 2018. However, as the overall market and other equities began to reverse their trend and started their respective recoveries, the ManpowerGroup stock followed suit.

After the trend reversal on Christmas Eve, the share price gained more than 55% in value before achieving its all new all-time high of $97.16 on April 23, 2019. Since peaking in late April, the share price has pulled back 5.8% below the April peak to close at $91.48 on May 22, 2019. While trailing the all-time high slightly, the May 22 closing price was 12% higher than it had been five years ago and 46.2% above the 52-week low from December 2018.

The May 22 closing price pulled within 0.6% of what the share price had been one year earlier. Additionally, the dividend income that yields nearly 2.4% pushed the total return into the positive territory and delivered a 1.8% total return for the trailing 12 months. Total returns over the past three years were significantly better at 26%. However, additional share price volatility early in the period also suppressed the total five-year return to just 27%.

Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.