Goldman Sachs reiterates Sell rating on Manpower stock despite Q2 beat

ManpowerGroup (NYSE: MAN) reported a Q2 2025 net loss of $1.44 per share, primarily due to an $89 million goodwill impairment charge, yet its adjusted EPS of $0.78 and revenue of $4.52 billion both surpassed analyst expectations. The company also issued Q3 EPS guidance of $0.77-$0.87, exceeding consensus estimates. Despite these beats, constant currency revenue declined 3% year-over-year, driven by continued weakness in key U.S. and European markets, and EBITA margins contracted by 50 basis points due to negative operating leverage. Goldman Sachs maintained its Sell rating and $42 price target, indicating ongoing concerns regarding staffing volume trends and margin pressures.

Analysis

ManpowerGroup (MAN) presented a mixed financial picture for Q2 2025, characterized by headline beats on adjusted metrics that were overshadowed by significant underlying weaknesses. The company reported adjusted EPS of $0.78 and revenue of $4.52 billion, surpassing analyst estimates of $0.68 and $4.35 billion, respectively. Furthermore, its Q3 EPS guidance of $0.77-$0.87 at the midpoint also came in above consensus. However, these positives are contrasted by a GAAP net loss of $1.44 per share, driven by a substantial $89 million non-cash goodwill impairment charge related to its Swiss and UK operations, signaling a deterioration in the value of assets in key European markets. The core business continues to face headwinds, with constant currency revenue declining 3% year-over-year, reflecting persistent softness in the U.S. and Europe, which together constitute two-thirds of revenue. This pressure on the top line contributed to a 50 basis point contraction in EBITA margins to 2.0% from negative operating leverage, which cost-cutting initiatives only partially mitigated. The business mix is also a concern, as the high-margin Experis brand saw declines while the Manpower and Talent Solutions brands returned to growth, potentially weighing on future profitability. These fundamental challenges provide context for Goldman Sachs' decision to maintain its Sell rating and $42.00 price target.

Key Decisions for Investors

• Investors should treat the Q2 adjusted earnings beat with caution, as the significant goodwill impairment, persistent revenue declines in core markets, and contracting EBITA margins underscore fundamental business challenges that align with Goldman Sachs' bearish outlook.
• Monitor the performance of the high-margin Experis brand and the effectiveness of cost-cutting measures, as stabilization in these areas is critical to offsetting negative operating leverage and improving profitability.
• Despite the stock's 3.34% dividend yield, the underlying weakness in U.S. and European staffing volumes warrants a risk-averse stance until there is clear evidence of a sustainable operational turnaround.