January 26, 2005  Email this 
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Manpower: Getting Personnel
According to employment experts, 2005 could be a good year for the U.S. job market. And as hiring picks up, Manpower (MAN) has the supply to keep up with demand. The world's second-largest provider of staffing services helps employers fill millions of temporary and permanent positions. Value Line analyst David Cohen thinks Manpower is an attractive long-term pick. He expects profits to grow between 15% and 20% this year and maintain annual double-digit growth over the next three to five years. Cohen isn't alone in his assessment of the stock -- 15 of the 18 analysts closely covering Manpower rate it a "buy" or "strong buy."
The firm, based in Milwaukee, has offices in about 70 countries and continues to build its presence overseas. Regulatory changes, for example, have given operations a boost in places like Japan, Germany and Italy, says Cohen. And while competition is fierce in the staffing industry, Manpower's world-wide presence gives it an edge when competing for lucrative multinational employment contracts. About 80% of its revenue comes from outside the U.S.
Additional growth is coming from Manpower's acquisition of firms in high-demand areas, such as accounting, tax preparing, auditing and career consulting. Such specialized businesses typically operate under high -- and profitable -- margins.
One shining example is its Jefferson Wells subsidiary, which Manpower acquired in 2001. The accounting services provider is flourishing as large businesses face more stringent financial requirements. And a pending change in accounting for expensing stock options could increase demand further, says Cohen.
The stock sells at 16 times consensus 2005 earnings estimates of $2.87 per share. Analysts have set a median 12-month price target of $56.50 -- a 22% upside to Manpower's recent price of $46.
--Erin Burt
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