Manpower (MAN; Baa1/BBB) Moody's affirms
Moody's has followed Friday's Adecco affirmation with the same for peer Manpower. It has leverage at 2.4x...we have it at net/gross 2.8x/4.2x - unclear why Manpower is getting a favourable adjustment (Moody's generally looks at gross) but we saw similar signs with Adecco. Co reports it at net 2.3x as it excludes the ~20% of debt in leases.
To reiterate raters are baking in a eventual recovery in earnings. Re. consensus, it expects a recovery in margins to somewhat offset headline weakness - though that pick-up is from a low 1.4% EBIT margin last year.
We continue to recommend caution and MAN27s is already pricing to Baa3 ratings. It is a sector we are watching next month - firmer macro than expected will remove any excuses for missing currently issued guidance - for Manpower that is a low-bar with Q3 revenue guidance of -2-6% and EBIT margin 2.2-2.4%. It should report in mid-Oct.