Is ManpowerGroup (MAN) Poised for a Turnaround? Here's When to Buy

Investors often ask: When is the right time to buy a stock that's underperforming but shows signs of strategic reinvention? For ManpowerGroup (NYSE:MAN), the answer might lie in the confluence of its undervaluation relative to peers, a strategic pivot via the Work Intelligence Lab, and near-term catalysts that could redefine its trajectory—despite current headwinds.

The Undervaluation Case: A P/E Ratio Below Its Peers

ManpowerGroup's price-to-earnings (P/E) ratio of 17.54x as of May 2025 sits well below the industry average of 22.53x, signaling a potential valuation discount. This metric, paired with a Price/Book ratio of 0.93, suggests the market is undervaluing the company's global scale and long-term assets. For comparison, peers like Korn Ferry (KFY) have outperformed MAN in returns over one and three years, but their valuations may already reflect optimism.

The dividend yield adds nuance. While ManpowerGroup's 3.42% yield—post a 53% cut to $0.72 per share—is lower than its peak, it still outperforms the S&P 500's average yield. The reduction, driven by a need to preserve cash amid declining profits, was a pragmatic move. Investors should focus on the new payout ratio of 120% (still elevated but halved from prior years), signaling a reset toward sustainability.

The Work Intelligence Lab: A Catalyst for Long-Term Growth

ManpowerGroup's Work Intelligence Lab, launched in May 遑2025, is its most compelling growth lever. This initiative leverages 22 billion data points** across 70 countries to predict workforce trends driven by AI, automation, and green economy shifts. Key strategic advantages include:

1. Real-Time Market Insight: By analyzing employer demand and worker sentiment in real time, the Lab positions ManpowerGroup as a trusted advisor for clients navigating labor market volatility.
2. Co-Creation with Clients: Embedding clients in the innovation process fosters deeper partnerships, potentially boosting retention and revenue.
3. Global Leadership: The Lab's focus on AI-driven solutions aligns with $150B+ spend on workforce tech tools by 2026, per industry estimates.

The financial upside here is significant. While Q1 2025 saw a 7% revenue decline, the Lab's MSP (Managed Service Provider) segment grew by double digits year-over-year, proving its potential to offset weakness in legacy divisions.

Near-Term Headwinds vs. Long-Term Potential

Critics point to ManpowerGroup's Q2 2025 guidance: a projected diluted EPS of $0.65–$0.75, far below the $0.99 consensus. This reflects structural challenges, including:
- Weakening demand in Europe and North America (operating losses in Northern Europe, a 35.8% decline in France).
- Currency headwinds, with a 3–7% constant-currency revenue drop expected.
- Margin pressure: Gross margins fell to 17.1%, driven by soft permanent recruitment activity.

Yet these hurdles are not insurmountable. Consider:
- APAC and Latin America growth: These regions offer 10–15% revenue expansion, mitigating weakness elsewhere.
- Cost discipline: The $25M Q1 stock repurchase and focus on restructuring costs signal a resolve to stabilize liquidity.
- Long-term EPS recovery: Analysts project a $2.20–$2.50 EPS range by 2026, assuming stabilization in core markets.

The Dividend Cut: A Necessary Reset

The dividend reduction—ending 32 years of consecutive payouts—has spooked short-term investors. But it's a strategic move to prioritize liquidity, especially as the company invests in the Work Intelligence Lab. While the yield is now 3.42%, ManpowerGroup's new payout ratio aligns better with its $1.44 annual dividend and a stock price of $42.07. Comparatively, peers like Robert Half International (RHI) maintain higher yields but face similar macro challenges.

Why Act Now?

The confluence of factors creates a rare entry point:
1. Valuation Discount: MAN trades at a 22% discount to its five-year average P/E, offering a margin of safety.
2. Catalyst Timing: The Work Intelligence Lab's impact on MSP segment growth and client retention could surprise to the upside in late 2025 or 2026.
3. Sector Leadership: With peers like Korn Ferry and Randstad (RAND.AS) also navigating headwinds, ManpowerGroup's data-driven pivot could carve out a niche.

Historically, when ManpowerGroup has delivered positive quarterly earnings surprises, a short-term holding period has yielded strong returns. A backtest of buying on EPS beats and holding for 20 trading days from 2020 to 2025 showed an average return of 51.58%, though with a maximum drawdown of -18.16% and a Sharpe ratio of 0.59. This underscores the strategy's potential to amplify gains during catalyst-driven periods, while also highlighting the need for risk management amid volatility.

Risks to Consider

• Economic Downturn: Further weakness in Europe/North America could delay recovery.
• Lab Execution: Managing 22 billion data points across 70 countries requires flawless execution.
• Currency Volatility: A strong dollar could exacerbate APAC revenue pressures.

Final Verdict: A Buy for the Long Game

ManpowerGroup isn't a “quick fix” investment. Near-term EPS misses and macro headwinds warrant caution. However, its strategic shift to AI-driven workforce solutions, undervaluation versus peers, and a dividend reset for sustainability create a compelling case for long-term investors.

The current price of $42.07 represents a 27% discount to its 2024 high—a stark contrast to its long-term growth potential. For those willing to look past the noise, MAN could be a multi-year winner, especially if the Work Intelligence Lab delivers on its promise.

Act now if:
- You have a 3–5 year investment horizon.
- You believe AI-driven workforce solutions will dominate the $500B staffing industry.
- You're comfortable with near-term volatility for long-term gains.

The question isn't if ManpowerGroup rebounds—it's when. The answer is now.