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Interpublic (IPG) Up 4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Interpublic Group (IPG - Free Report) . Shares have added about 4% 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 the most recent earnings report in order to get a better handle on the important drivers.

Interpublic Beats on Q1 Earnings & Revenues Estimates

Interpublic reported better-than-expected first-quarter 2021 results.

Adjusted earnings (excluding 22 cents from non-recurring items) of 45 cents per share beat the Zacks Consensus Estimate by more than 100%. Moreover, the bottom-line also surged more than 100% on a year-over-year basis.

Net revenues of $2.03 billion beat the consensus estimate by 2.8% and increased 2.8% on a year-over-year basis. The upside was caused by organic net revenues increase of 1.9% and foreign currency translation was positive 1.5%. Total revenues of $2.26 billion declined 4.4% year over year.

Operating Results

Operating income in first-quarter 2021 came in at $243 million compared with $75.9 million in the prior-year quarter. Operating margin on net revenues surged to 12% from 3.9% in the year-ago quarter. Operating margin on total revenues also increased to 10.8% from 3.2% in the year-ago quarter.

Adjusted EBITA came in at $265.9 million, compared with $97.2 million at the end of the prior-year quarter. Adjusted EBITA margin on net revenues inched up to 13.1% from 4.9% in the year-ago quarter. Adjusted EBITA margin on total revenues rose to 11.8% from 4.11% in the year-ago quarter. Total operating expenses of $2 billion declined 11.8% year over year.

Balance Sheet

As of Mar 31, 2020, Interpublic had cash and cash equivalents of $2.02 billion compared with $2.51 billion at the end of the prior quarter. Total debt was $3.45 billion compared with $3.47 billion at the end of the prior quarter.
During the quarter, the company paid out a cash dividend of 27 cents per share, amounting to $109.1 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 18.67% due to these changes.

VGM Scores

At this time, Interpublic has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Interpublic has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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