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Interpublic Group of Companies (IPG)
NYSE:IPG
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Interpublic Group of Companies
(NYSE:IPG)
70Outperform
Positive Factors
Revenue Growth
The sale of digital specialty agencies and increased principal based media offerings should help revenue trends over time.
Strategic Acquisitions
IPG management is focusing on acquiring capabilities in faster-growth areas like retail and healthcare, with a good M&A track record.
Negative Factors
Margin Pressure
Internal investments, particularly in AI capabilities, are expected to pressure margins.
Interpublic Group of Companies (IPG) vs. S&P 500 (SPY)
Market Cap
$10.18B
Dividend Yield4.83%
Average Volume (3M)6.74M
Price to Earnings (P/E)15.0
Beta (1Y)0.83
Revenue Growth-1.81%
EPS Growth-35.74%
CountryUS
Employees53,000
SectorCommunication Services
Sector Strength82
IndustryTraditional Media
Share Statistics
EPS (TTM)1.83
Shares Outstanding372,649,170
10 Day Avg. Volume8,717,117
30 Day Avg. Volume6,737,008
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.95
Price to Cash Flow (P/CF)-2.10
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$34.00Price Target Upside30.32% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Interpublic Group of Companies Business Overview & Revenue Model
Company DescriptionInterpublic Group of Cos., Inc. engages in the provision of advertising and marketing services. The company specializes in consumer advertising, digital marketing, communications planning and media buying, public relations, and specialized communications disciplines. It operates through the following segments: Integrated Agency Network (IAN), Constituency Management Group (CMG), and Corporate and Other. The IAN segment includes advertising and media services, as well as a comprehensive array of global communications and marketing services. The CMG segment offers events and public relations services as well as sports and entertainment marketing, corporate and brand identity, and strategic marketing consulting. The Corporate and Other segment refers to the Acxiom activities. The company was founded on September 18, 1930 and is headquartered in New York, NY.
How the Company Makes MoneyIPG generates revenue primarily through the provision of marketing and advertising services to its clients. The company earns money by offering a variety of services such as media buying, strategic consulting, creative advertising, digital marketing, and public relations. Revenue is generated through fees for services, which can be project-based or retainer agreements, and through commissions on media placements. Additionally, IPG benefits from strategic partnerships and collaborations with media companies and technology platforms, which enhance its service offerings and contribute to its earnings. The company's diverse client base and global presence allow it to capitalize on the growing demand for comprehensive marketing solutions across different sectors and regions.
Interpublic Group of Companies Financial Statement Overview
Summary
Interpublic Group of Companies exhibits stable financial performance with strengths in cash flow management and operational efficiency. Revenue growth has been challenging, but the company maintains profitability through efficient operations. The balance sheet is stable, though monitoring liabilities is advised.Income Statement
Interpublic Group of Companies has shown a mixed performance in its income statement. The gross profit margin has remained stable, indicating efficient cost management. However, revenue has shown a slight decline over the last two years, from $10.89 billion to $10.69 billion, which could be a concern. Despite this, the company has maintained a solid EBIT margin, indicating operational efficiency. Yet, the net profit margin has decreased, suggesting rising expenses or other financial pressures.75
Positive
Balance Sheet
The company's balance sheet reflects moderate financial stability. The debt-to-equity ratio is reasonable, indicating a balanced approach towards leveraging. However, there has been some fluctuation in stockholders' equity, which could impact long-term stability. The equity ratio remains healthy, showing the company's reliance on equity versus debt. Overall, while the balance sheet is stable, potential risks from liabilities should be monitored.70
Positive
Cash Flow
Interpublic Group of Companies demonstrates strong cash flow management. The free cash flow has grown significantly, suggesting effective cash generation from operations. The operating cash flow to net income ratio is favorable, indicating that the company is able to convert a good portion of its net income into cash. This strong cash position provides flexibility for future investments and debt management.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 10.69B | 10.89B | 10.93B | 10.24B | 9.06B | Gross Profit |
| 1.82B | 1.81B | 1.84B | 1.85B | 1.35B | EBIT |
| 1.20B | 1.48B | 1.38B | 1.44B | 967.30M | EBITDA |
| 1.54B | 1.90B | 1.77B | 1.75B | 1.30B | Net Income Common Stockholders |
| 689.50M | 1.10B | 938.00M | 952.80M | 351.10M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.19B | 2.39B | 2.55B | 3.27B | 2.51B | Total Assets |
| 18.33B | 19.27B | 18.84B | 19.91B | 18.04B | Total Debt |
| 4.25B | 4.67B | 4.53B | 4.80B | 5.18B | Net Debt |
| 2.07B | 2.29B | 1.99B | 1.53B | 2.67B | Total Liabilities |
| 14.42B | 15.22B | 15.10B | 16.30B | 15.01B | Stockholders Equity |
| 3.80B | 3.94B | 3.65B | 3.53B | 2.90B |
| Cash Flow | Free Cash Flow | |||
| 913.40M | 375.40M | 430.70M | 1.88B | 1.68B | Operating Cash Flow |
| 1.06B | 554.70M | 608.80M | 2.08B | 1.85B | Investing Cash Flow |
| -151.10M | -85.40M | -430.10M | -185.30M | -216.20M | Financing Cash Flow |
| -1.02B | -634.30M | -899.40M | -1.08B | -346.20M |
Interpublic Group of Companies Technical Analysis
Negative
26.09
Price Trends
27.41
Negative
28.24
Negative
28.97
Negative
Market Momentum
-0.17
Positive
39.06
Neutral
14.22
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IPG, the sentiment is Negative. The current price of 26.09 is below the 20-day moving average (MA) of 27.07, below the 50-day MA of 27.41, and below the 200-day MA of 28.97, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 39.06 is Neutral, neither overbought nor oversold. The STOCH value of 14.22 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IPG.
Interpublic Group of Companies Risk Analysis
Interpublic Group of Companies disclosed 31 risk factors in its most recent earnings report. Interpublic Group of Companies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Interpublic Group of Companies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $16.21B | 11.07 | 37.92% | 3.39% | 6.79% | 7.79% | |
73 Outperform | $25.73B | 14.33 | 16.11% | 2.54% | 8.35% | 26.60% | |
70 Outperform | $10.18B | 14.96 | 17.82% | 4.83% | -1.81% | -35.74% | |
63 Neutral | $8.82B | 12.72 | 16.04% | 6.16% | 4.34% | -59.80% | |
59 Neutral | $29.20B | 0.14 | -12.92% | 4.06% | 2.18% | -51.74% | |
48 Neutral | $443.97M | ― | -14.59% | 6.28% | -9.09% | -356.14% | |
45 Neutral | $35.93M | ― | -143.62% | ― | -4.66% | -229.79% |
* Communication Services Sector Average
Performance Comparison
IPG
Interpublic Group of Companies
26.09
-5.17
-16.54%
ACCO
ACCO Brands
4.71
-0.32
-6.36%
HHS
Harte-Hanks
5.18
-2.45
-32.11%
OMC
Omnicom Group
80.01
-9.82
-10.93%
WPP
WPP
40.83
-1.63
-3.84%
PUBGY
Publicis Groupe SA
24.48
-1.66
-6.35%
Interpublic Group of Companies Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -2.79% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
While the earnings call highlighted strategic achievements in new business wins and a strong financial position, significant challenges such as organic revenue decline, notable account losses, and restructuring charges present a balanced outlook. The proposed merger with Omnicom is expected to provide strategic benefits, but macroeconomic and geopolitical uncertainties weigh on the sentiment.Highlights
Strong Financial Position
The company concluded the year with $2.2 billion of cash on the balance sheet and a gross financial debt to EBITDA ratio of 1.7x.
Notable New Business Wins
Headline wins included Amgen, Little Caesars, and Volvo on the media front, as well as Pizza Hut and Kimberly-Clark in creative consolidation.
Adjusted EBITDA Margin Achievement
The company delivered an adjusted EBITDA margin of 24.3% in Q4 and a full year margin of 16.6%, meeting their set targets.
Strategic Acquisition Enhancements
The planned acquisition of Intelligence Node enhances commerce capabilities, providing clients with real-time retail intelligence.
Lowlights
Organic Revenue Decline
Organic revenue decreased by 1.8% in Q4, with full-year organic growth only reaching 20 basis points, falling short of forecasts.
Significant Account Loss Impact
Trailing losses in key media accounts are expected to weigh on growth by 4.5 to 5 percentage points in 2025.
Challenges in Certain Markets
Organic revenue decreases in the U.S. (-3.2%), U.K. (-3.3%), and Continental Europe (-3%) were noted, reflecting account losses and regional client spending declines.
Restructuring Charges
A restructuring program will incur approximately $250 million in charges, impacting the financial results, with a significant portion being noncash.
Company Guidance
During the Interpublic Group's fourth quarter and full year 2024 conference call, several key financial metrics and guidance for the upcoming year were discussed. The company reported a 1.8% organic revenue decrease in Q4, leading to a full-year organic growth of 20 basis points. Adjusted EBITDA margin was 24.3% for Q4 and met the full-year target of 16.6%. Diluted earnings per share (EPS) were $0.92 as reported and $1.11 when adjusted for various items, with full-year adjusted EPS at $2.77. The company returned $727 million to shareholders through dividends and share repurchases. Looking forward, IPG anticipates an organic revenue decrease of 1% to 2% in 2025, impacted by prior account losses, and plans a restructuring to achieve $250 million in savings. Additionally, the proposed merger with Omnicom is expected to generate $750 million in cost synergies.Interpublic Group of Companies Corporate Events
M&A TransactionsBusiness Operations and Strategy
Interpublic Group Merges with Omnicom Group
Neutral
Dec 9, 2024
Omnicom Group Inc. is set to merge with The Interpublic Group of Companies, Inc., transforming IPG into a wholly owned subsidiary. Shareholders of IPG will receive Omnicom stock at a specified exchange ratio, while existing IPG stock options and awards will convert into Omnicom equivalents. The merger aims to enhance innovation and operational efficiency, with strategic governance changes anticipated post-closing. However, the merger is subject to various conditions, including regulatory approvals and stockholder consent, with termination clauses and financial penalties outlined for potential non-completion scenarios.
M&A TransactionsBusiness Operations and Strategy
Interpublic Group and Omnicom Announce Strategic Merger
Positive
Dec 9, 2024
Omnicom Group Inc. and The Interpublic Group of Companies, Inc. have entered into a merger agreement, creating a powerful marketing and sales company with unmatched capabilities. This strategic move aims to combine their marketing talent and innovative services, positioning them for growth in the evolving marketing landscape. The merger is expected to enhance shareholder value through cost synergies and improved earnings per share. With a strong financial profile and advanced technology platforms, the combined entity seeks to deliver superior, data-driven outcomes for clients globally.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.