Updated 3/11/25
ManpowerGroup Inc. (MAN) is a global staffing and workforce solutions provider with a long history of connecting businesses with talent. Founded in 1948, the company operates in over 75 countries, offering a range of services from temporary staffing to workforce consulting.
Recently, the stock has been under pressure, trading around $60.45 and down more than 20% from its 52-week high. Investors who prioritize dividend income may be wondering whether ManpowerGroup’s high yield is a great opportunity—or a sign of trouble. Let’s take a deep dive into its dividend metrics, financial health, and potential risks.
Key Dividend Metrics
📢 Dividend Yield: 5.03%
💰 Annual Dividend: $3.08 per share
📈 5-Year Average Yield: 3.34%
📆 Ex-Dividend Date: December 2, 2024
🎯 Payout Ratio: 102.33%
📊 Dividend Growth: Historically steady but facing some challenges
Dividend Overview
A dividend yield above 5% is certainly attention-grabbing, especially for a company in the staffing industry, where yields tend to be more modest. That yield is also significantly higher than the company’s five-year average of 3.34%, which suggests that the stock’s decline has played a role in pushing up the yield.
However, what stands out the most is the payout ratio of 102.33%. This means the company is currently paying out more in dividends than it earns in net income. That’s not a sustainable model in the long run. If earnings don’t recover, there’s a risk the company could be forced to trim its dividend.
For now, the next ex-dividend date is set for December 2, 2024, meaning investors who want to receive the next payout will need to own shares before that date.
Dividend Growth and Safety
ManpowerGroup has a solid track record of returning capital to shareholders, but the current numbers raise some questions about how sustainable its dividend will be moving forward.
- Growth History – The company has steadily increased its dividend over time, but with recent earnings pressure, further growth could slow.
- Cash Flow Strength – Cash flow is often a better indicator of dividend sustainability than earnings alone. The company generated $389.9 million in free cash flow, which is encouraging, but net income is only $145.1 million, which doesn’t fully support the dividend.
- Potential for a Cut – With the payout ratio exceeding 100%, the company might have to adjust its dividend if earnings don’t pick up. Investors should keep an eye on revenue trends over the next few quarters.
Chart Analysis
Price Action and Trend
The price action for ManpowerGroup (MAN) has been in a clear downtrend over the past several months. The stock attempted to stabilize near the $55 level before making a recent push higher, but it remains well below its previous highs. The current price of 61.19 suggests some short-term strength, but the overall trend remains weak.
Moving Averages
The 50-day moving average (orange line) is sloping downward, indicating that short-term momentum is still bearish despite the recent bounce. More importantly, the 200-day moving average (blue line) is also trending lower, confirming that the longer-term trend is still to the downside.
The stock recently made an attempt to break above the 50-day moving average but struggled to hold those gains. Until the price establishes support above this level and shows sustained strength, the overall trend remains bearish.
Volume and Buying Interest
Volume has been relatively low in the latest trading sessions, suggesting that the recent bounce lacks strong conviction from buyers. However, there were noticeable spikes in volume during previous declines, which could indicate institutional selling. The lack of follow-through buying after recent price increases raises questions about whether this is just a short-term relief rally or the start of something more substantial.
Relative Strength Index (RSI)
The RSI indicator is showing an upward move but remains in neutral territory. This suggests that while the stock has seen a short-term rebound, it is not yet in overbought territory, leaving room for further upside. However, a failure to push higher could result in another leg down if selling pressure returns.
Resistance and Support Levels
The immediate resistance level appears to be near 61.50, where the stock struggled to push through. A successful breakout above this level could open the door for a test of the 65 area, where the 200-day moving average currently sits. On the downside, support is around 58, with stronger support near 55, where the stock previously found buyers.
Recent Candle Analysis
Looking at the last five candles, there has been some indecision in price action. The presence of upper wicks on multiple days suggests selling pressure near recent highs. While the stock is attempting to hold its ground, the lack of strong bullish candles indicates that buyers are not fully in control yet. If momentum fades, a retest of lower support levels could come into play.
Analyst Ratings
📈 Upgrades:
- 📊 BNP Paribas Exane upgraded ManpowerGroup from “Underperform” to “Outperform” on June 11, 2024, adjusting the price target to $92 from $73. The firm cited improved operational efficiencies and a more favorable outlook for global staffing demand.
- 💡 Redburn initiated coverage on June 20, 2023, with a Buy rating and a price target of $94. Analysts pointed to ManpowerGroup’s strong positioning in the labor market and the potential for expansion in emerging markets as key growth drivers.
📉 Downgrades:
- ⚠️ Argus downgraded the stock from Buy to Hold on April 27, 2023, citing concerns over slowing revenue growth and margin pressures due to economic uncertainties.
- 🏦 JP Morgan lowered its rating from Overweight to Neutral on July 11, 2022, setting a price target of $78. Analysts expressed caution over the cyclical risks associated with the staffing industry, noting potential headwinds from economic slowdowns.
- 🔻 Truist Securities cut its rating from Buy to Hold on July 15, 2022, emphasizing concerns about ManpowerGroup’s exposure to economic downturns and competitive pressures within the industry.
🎯 Consensus Price Target:
The latest consensus price target for ManpowerGroup stands at approximately $69.33, reflecting a mix of bullish and bearish sentiment. Some analysts remain optimistic about the company’s long-term growth potential, while others are cautious about near-term economic pressures that could impact earnings.
These mixed views highlight the challenges in evaluating ManpowerGroup’s future performance. The company’s success will largely depend on its ability to navigate shifting labor market trends and adapt to changing economic conditions.
Earning Report Summary
ManpowerGroup’s latest earnings report showed a mix of progress and ongoing challenges. The company reported net earnings of $22.5 million for the fourth quarter of 2024, which translates to $0.47 per diluted share. That’s a big turnaround from the same quarter last year, where they posted a net loss of $84.5 million, or $1.73 per share. Revenue for the quarter came in at $4.4 billion, down about 5% compared to the previous year.
A few key factors played into these numbers. The company faced restructuring costs, pension settlements, and some losses related to the sale of its Austria business, which has now moved to a franchise model. Altogether, these charges cut into earnings by about $0.55 per share. Without those one-time expenses, adjusted earnings per share would have been $1.02, though that still represents a 27% decline when adjusted for currency fluctuations.
Speaking of currency, the stronger U.S. dollar had a noticeable impact. If foreign exchange rates had stayed the same as last year, the revenue decline would have been closer to 3% instead of 5%.
ManpowerGroup’s CEO, Jonas Prising, acknowledged that business conditions have been steady but still at lower-than-ideal levels, especially in North America and Europe. He pointed out that the company has been making strategic adjustments, including cost-cutting efforts in Europe, to keep things moving in the right direction. Despite the current environment, he expressed optimism about the company’s transformation plans heading into 2025.
For the full year of 2024, ManpowerGroup reported $145.1 million in net earnings, or $3.01 per share. That’s up from $88.8 million, or $1.76 per share, the previous year. However, just like in the fourth quarter, there were some major restructuring and pension-related expenses that weighed on the numbers. If those one-time items were excluded, adjusted earnings per share would have been $4.55, which is still a 21% drop compared to last year. Total revenue for the year came in at $17.9 billion, down 6% overall, or 3% when adjusted for currency shifts.
Looking ahead, ManpowerGroup is forecasting earnings per share for the first quarter of 2025 to land somewhere between $0.47 and $0.57. The company is also factoring in a negative currency impact of about $0.06 per share and an estimated tax rate of 36%.
Financial Health and Stability
A strong balance sheet is key to supporting a stable dividend. Here’s how ManpowerGroup stacks up:
- Debt Levels – The company carries $1.33 billion in total debt with a debt-to-equity ratio of 62.55%. While not alarmingly high, it’s something to monitor.
- Cash Position – With $509.4 million in cash, the company has some cushion, but it will need to continue generating solid cash flow to maintain payouts.
- Profitability – A profit margin of just 0.81% and an operating margin of 1.95% are thin, which means there isn’t much wiggle room if revenue declines further. Return on equity (ROE) sits at 6.65%, suggesting that profitability is lagging behind some competitors.
Overall, while the company isn’t in immediate financial distress, its low profitability and debt levels could become a challenge if economic conditions worsen.
Valuation and Stock Performance
ManpowerGroup appears relatively cheap compared to historical levels, but there are some reasons for caution:
- Price-to-Earnings (P/E) Ratio – The stock trades at a forward P/E of 16.37, down from its trailing P/E of 20.33. This could suggest that analysts expect earnings to improve slightly.
- Price-to-Sales Ratio – At just 0.17, the stock is trading at a very low multiple relative to revenue. That could be a sign of undervaluation—or a warning that investors are expecting continued weak growth.
- Stock Movement – The stock has dropped significantly from its 52-week high of $78.87 and is now hovering closer to its 52-week low of $53.31.
- Technical Indicators – Shares are currently trading below both the 50-day moving average ($57.70) and the 200-day moving average ($66.14), which is typically a bearish signal.
For value investors, the low valuation may be appealing, but the declining stock price suggests that the market has concerns about the company’s near-term outlook.
Risks and Considerations
Dividend investors need to weigh the potential for income against the risks that could impact future payments. Here are some factors to consider:
- Economic Sensitivity – Staffing companies are heavily tied to overall employment trends. If hiring slows down due to economic uncertainty, revenue and earnings could decline further.
- Dividend Coverage Concerns – With a payout ratio exceeding 100%, the company is relying on cash flow rather than earnings to sustain its dividend. If cash flow weakens, the dividend could be at risk.
- Stock Performance Weakness – The stock has been trending downward, and breaking below key moving averages suggests that selling pressure remains.
- Debt Load – While manageable, the company’s debt levels could limit flexibility if business conditions deteriorate.
- Institutional Selling – Institutions own more than 101% of the stock, meaning a significant portion is held by large investors. If they begin to reduce their positions, it could put additional downward pressure on the stock.
Final Thoughts
ManpowerGroup offers an attractive 5% dividend yield, which is well above its historical average. However, the high payout ratio, weak earnings growth, and declining stock price raise concerns about whether the dividend is sustainable over the long term.
The company’s ability to generate free cash flow is a positive sign, but with earnings falling short of covering the dividend, investors should be cautious. If revenue continues to decline or if economic conditions worsen, the company may be forced to adjust its payout.
For income investors, this is a stock that requires careful monitoring. The next few earnings reports will be key in determining whether the dividend remains intact or if changes are on the horizon.
Recent Comments