Manpower (MAN) Hit Hard by Brexit: Time to Sell the Stock?

Investors’ apprehension about the global stock market has increased after the U.K. cast 51.8% votes in favor of exiting the European Union (EU). This has resulted in a bloodbath in the stock market with major indices like Dow Jones Industrial Average and S&P 500 declining 4.8% and 5.3%, respectively, in the previous two trading sessions.

There is no denying the fact that most of the stocks round the world have been hammered. Various U.S. companies from diverse sectors with considerable exposure to the U.K. market also felt the ripple effect. One such hard-hit stock is ManpowerGroup Inc. MAN. The company’s shares have plunged 21.5% in the last two trading sessions and also touched a 52-week low of $57.26.

ManpowerGroup, the global leader in the employment services industry, believes that the U.K.’s exit from EU will have an impact on business as EU workers will not be able to move freely to the U.K.

ManpowerGroup solutions Managing Director, James Hick, observed a couple of weeks ago that despite fears of Brexit, the U.K. added 404,000 jobs in the past one year period and the nation still has a demand for workers. Presently, 2.2 million people from the EU are working in the U.K. Now that Brexit has materialized, it remains to be seen how many of these workers will continue to stay in the U.K. in the long term.

Nearly, two-third of the company’s revenues comes from the Europe and the U.K. In fact, the nation contributes nearly 10% of the ManpowerGroup’s total revenue. We believe that the U.K.’s decision to exit the EU will affect the “hiring sentiment” in the region, which in turn, would hamper the company’s revenues.

The strengthening U.S. dollar will also impact ManpowerGroup’s performance as nearly 85% of its revenues is derived from international markets.

ManpowerGroup which shares space with Kelly Services, Inc. KELYA currently has a Zacks Rank #4 (Sell).

Stocks to Consider

Some better-ranked stocks in the same industry include BG Staffing, Inc. BGSF and Insperity, Inc. NSP , both sporting a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.