Will ManpowerGroup (MAN) Q2 Earnings Let Down Investors?

ManpowerGroup Inc. (NYSE:MAN) is set to report second-quarter 2016 results before the opening bell on Jul 21, 2016. In the first quarter, the company surpassed the Zacks Consensus estimate by 5.4%. Notably, the company beat the Zacks Consensus Estimate in each of the last four quarters, with an average earnings surprise of 10%. However, it has yet to be seen if the company will be able to keep its earnings streak alive in this quarter as well.

Earnings Whispers

Our proven model does not conclusively show that ManpowerGroup is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

ManpowerGroup has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.52. The company carries a Zacks Rank #5 (Strong Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing This Quarter

We believe that the U.K.’s decision to exit the EU may not bode well for the company as this will affect the “hiring sentiment” in the region, which in turn, would hamper the company’s revenues. The strengthening U.S. dollar will also hurt ManpowerGroup’s performance as nearly 85% of its revenues is derived from international markets.

Management earlier said foreign currency headwinds are likely to hamper revenue growth by 2 cents per share during second-quarter 2016. Including a negative impact from foreign exchange, ManpowerGroup expects second-quarter 2016 earnings per share in the range of $1.47–$1.55. The company expects revenue growth in the Americas as well as Southern Europe to be in the mid-single digit range. For Northern Europe and APME, the company expects revenue growth in the upper single-digit range.

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Caterpillar Inc. (NYSE:CAT) has an Earnings ESP of +2.08% and a Zacks Rank #3 (Hold).

Amazon.com, Inc. (NASDAQ:AMZN) has an Earnings ESP of +37.72% and a Zacks Rank #3.

Expedia Inc. (NASDAQ:EXPE) has an Earnings ESP of +17.07% and a Zacks Rank #3.