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Earnings Results: Manpower stock jumps as pent-up demand and labor shortages boost earnings

Shares of ManpowerGroup Inc. charged higher Tuesday, after the staffing services company reported better-than-expected first-quarter earnings and provided an upbeat outlook, as the COVID-19 pandemic and war in Ukraine contributed to drive record demand for skilled labor.

The stock
MAN,
+7.11%

ran up 6.5% in morning trading, which puts it on track for the biggest one-day gain since it rallied 14.1% on Nov. 9, 2020. It is also headed for the biggest one-day post-earnings gain since it climbed 11.6% after first-quarter 2019 results were reported on April 18, 2019.

“The pandemic effects are still noticeable in many markets where supply-side issues have led to pent-up demand, and with that, continued need for workers,” said Chief Executive Jonas Prising, according to a FactSet transcript of a post-earnings conference call with analysts. “And as a result, we see the request [for] skilled workers at record highs, especially in [information technology], finance and manufacturing operations.”

He said the war in Ukraine has led to additional labor-market disruptions in select industries, particularly in the automotive supply chain.

And overall, Prising said talent shortages were “a significant challenge for our clients,” but benefited the company’s brands and portfolio services.

Before Tuesday’s opening bell, the company reported first-quarter net income that rose to $91.6 million, or $1.68 a share, from $62.0 million, or $1.11 a share, in the same period a year ago.

Excluding nonrecurring items, such as costs associated with the U.S. Experis acquisition and losses related to the sale of the Russia business in January, adjusted earnings per share came to $1.88, above the FactSet consensus of $1.59.

Revenue grew 4.4% to $5.14 billion, above the FactSet consensus of $5.08 billion, boosted by record levels of permanent recruitment activity.

For the second quarter, the company expects adjusted EPS of $2.31 to $2.39, up from $1.89 a year ago and above the current FactSet consensus of $2.13.

The company had sold its Russia business, which included operations in Ukraine, in January, which was about a month before Russia invaded Ukraine. Manpower said in February that the expected loss from the sale of the Russia business was $8 million.

Separately, the company said it repurchased $60 million worth of its stock during the first quarter, which represents about 1.2% of Manpower’s current market capitalization of $5.04 billion.

The stock has slipped 2.9% year to date, while the S&P 500 index
SPX,
+1.34%

has lost 6.7%.

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