Is ManpowerGroup Stock a Buy at a 63.5% DCF Discount?

The question of whether ManpowerGroup (NYSE: MAN) represents a compelling value opportunity hinges on reconciling its stark valuation discount with the company's financial performance and broader labor market dynamics. With DCF models suggesting a 41.3% to 69% undervaluation relative to its current price of $30.825, the stock appears to trade at a significant discount to intrinsic value. However, this mispricing may reflect legitimate concerns about earnings stagnation and a soft labor market, which together complicate the investment case.

Valuation Discrepancy: A Tale of Divergent Models

Discounted cash flow (DCF) analyses from multiple sources underscore a consensus that ManpowerGroup is undervalued, albeit with varying degrees of optimism. Alpha Spread estimates a fair value of $99.91 per share, implying a 69% upside, while SAHM Capital's $78.06 fair value aligns with the 63.5% discount cited in the prompt. Simply Wall St and ValueInvesting.io offer more moderate valuations of $67.29 and $43.76, respectively, reflecting a 54.7% and 41.3% discount. These divergent outcomes highlight uncertainties in forecasting ManpowerGroup's cash flow trajectory, particularly in a labor market marked by cautious hiring and uneven regional performance.

The discrepancy may also stem from differing assumptions about growth rates, discount rates, and exit multiples. For instance, models projecting a rapid rebound in staffing demand (such as Alpha Spread's $99.91 estimate) likely assume a sharper recovery in economic conditions, whereas more conservative models (e.g., ValueInvesting.io's $43.76) may factor in prolonged softness. Investors must weigh these assumptions against the company's recent financial performance and macroeconomic trends.

Earnings Stagnation and a Cautious Labor Market

ManpowerGroup's Q3 2025 results reveal a stabilization in revenue after 11 consecutive quarters of decline but fail to demonstrate meaningful earnings growth. This "holding pattern" coincides with a global labor market characterized by precision hiring and economic uncertainty. The company's own Employment Outlook Survey for December 2025 underscores this caution: the global Net Employment Outlook (NEO) for Q1 2026 stands at 24%, a marginal improvement from the prior quarter but a 25% decline year-over-year.

Key trends from the survey highlight structural shifts in hiring behavior. While 40% of organizations plan to expand staff, only 19% of new hires are intended to backfill departures, signaling a shift toward strategic growth rather than replacement hiring. Conversely, 16% of employers anticipate workforce reductions, driven primarily by economic conditions. These dynamics suggest that ManpowerGroup's core staffing business may face prolonged pressure, as employers prioritize cost control over aggressive expansion.

Is the Discount Justified?

The 63.5% DCF discount (per SAHM Capital) appears to embed a margin of safety for investors, but it also reflects skepticism about the company's ability to restore earnings growth. While the DCF models assume eventual normalization in labor demand, the current environment suggests that normalization may take longer than anticipated. For example, the survey data indicates that economic uncertainty-not technological disruption-is the primary constraint on hiring, implying that macroeconomic risks (e.g., inflation, interest rates) remain a wildcard.

However, the valuation mispricing could present an opportunity for long-term investors who believe the market is overcorrecting. At $30.825, the stock trades at a discount to even the most conservative DCF estimates, offering a buffer against near-term volatility. Additionally, the Employment Outlook Survey hints at a potential inflection point: the 24% global NEO, while down year-over-year, represents a stabilization after a multi-year decline. If economic conditions stabilize in 2026, ManpowerGroup could benefit from a rebound in staffing demand, particularly in growth-oriented sectors.

Risks and Considerations

Investors must also consider the risks of holding ManpowerGroup stock. A prolonged soft labor market could delay earnings recovery, and the company's exposure to cyclical industries (e.g., manufacturing, construction) adds vulnerability. Furthermore, the DCF models rely on assumptions about future cash flows that may not materialize if economic conditions deteriorate further.

Conclusion: A Buy for the Patient Investor

ManpowerGroup's 63.5% DCF discount suggests the stock is undervalued, but the investment case depends on the timeline for a labor market recovery. For patient investors who can tolerate short-term volatility and believe in the eventual normalization of hiring activity, the current price offers an attractive entry point. However, those who expect a prolonged economic slowdown may prefer to wait for clearer signs of stabilization. In either case, the valuation mispricing warrants closer scrutiny, particularly given the company's pivotal role in tracking and responding to labor market trends.