A month has gone by since the last earnings report for Interpublic Group (IPG). Shares have added about 6.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Interpublic due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Interpublic Tops Q3 Earnings Estimates, ’18 View Intact
Interpublic reported solid third-quarter 2018 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings of 48 centsper share beat the Zacks Consensus Estimate by 2 cents and improved on a year-over-year basis.
Net revenues of $1,895.7 million beat the consensus mark by 15 million and increased 3.4% year over year. The year-over-year growth was driven by organic revenue growth of 5.4%, which was partially offset by a negative impact of 1.3% from foreign currency movement and 0.7% from net divestitures.
Interpublic witnessed organic net revenue growth of 5% in the United States and 6% in international markets. Total revenues of $2,297.5 million increased 4.0%from the year-ago quarter.
Operating Results
Operating income in third-quarter 2018 was $261.7 million, up 2.6% year over year. Operating margin on net revenues was 13.8% compared with 13.9% in the year-ago quarter. Operating margin on total revenues was 11.4% compared with 11.5% in the year-ago quarter. Total operating expenses declined 4.2% year over year to $2,035.8 million.
Balance Sheet
As of Sep 30, 2018, Interpublic had cash, cash equivalents and marketable securities of $1,860.3 million compared with $791 million at the end of 2017. Total debt was $3.34 billion as of Sep 30, 2018, compared with $1.37 billion at the end of 2017.
Share Repurchase and Dividend
During the third quarter of 2018, Interpublic repurchased 0.1 million shares at an aggregate cost of $2.6 million and an average price of $23.56 per share, including fees. In the first nine months of 2018, it repurchased 5.1 million shares of its common stock at an aggregate cost of $117.1 million and an average price of $23.03 per share, including fees.
In the reported quarter, the company declared and paid a cash dividend of 21 cents per share, totaling $80.4 million.
2018 Outlook
Interpublic reaffirmed its full-year guidance. The company expects organic revenue growth of 4-4.5% and operating margin expansion of 60-70 basis points.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Interpublic has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Interpublic has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Interpublic Group of Companies, Inc. (The) (NYSE:IPG
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