Over the past six months, ManpowerGroup’s stock price fell to $59.63. Shareholders have lost 18.9% of their capital, which is disappointing considering the S&P 500 has climbed by 1%. This may have investors wondering how to approach the situation.

Is there a buying opportunity in ManpowerGroup, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Even with the cheaper entry price, we're sitting this one out for now. Here are three reasons why there are better opportunities than MAN and a stock we'd rather own.

Why Do We Think ManpowerGroup Will Underperform?

Founded during the post-World War II economic boom when businesses needed temporary workers, ManpowerGroup (NYSE:MAN) connects millions of people to employment opportunities through its global network of staffing, recruitment, and workforce management services.

1. Core Business Falling Behind as Demand Declines

Investors interested in Professional Staffing & HR Solutions companies should track organic revenue in addition to reported revenue. This metric gives visibility into ManpowerGroup’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, ManpowerGroup’s organic revenue averaged 3.5% year-on-year declines. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests ManpowerGroup might have to lean into acquisitions to grow, which isn’t ideal because M&A can be expensive and risky (integrations often disrupt focus).

2. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect ManpowerGroup’s revenue to drop by 5.8%, close to its 5.1% annualized declines for the past two years. This projection doesn't excite us and implies its newer products and services will not accelerate its top-line performance yet.

3. EPS Trending Down

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Sadly for ManpowerGroup, its EPS declined by 10% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

Final Judgment

ManpowerGroup falls short of our quality standards. Following the recent decline, the stock trades at 12.8× forward price-to-earnings (or $59.63 per share). This valuation tells us a lot of optimism is priced in - you can find better investment opportunities elsewhere. We’d recommend looking at one of our top digital advertising picks.

Stocks We Like More Than ManpowerGroup

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