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Interpublic (IPG) Up 5.8% 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 5.8% 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 catalysts.

Interpublic Beats on Q2 Earnings & Revenues Estimates

The Interpublic Group of Companies reported better-than-expected second-quarter 2021 results.

Adjusted earnings (excluding 4 cents from non-recurring items) of 70 cents per share beat the Zacks Consensus Estimate by 55.6%. Moreover, the bottom line surged more than 100% on a year-over-year basis. Net revenues of $2.3 billion beat the consensus estimate by 8.7% and increased 12% on a year-over-year basis. The upside was caused by organic net revenues increase of 19.8% and foreign currency translation was positive 3.1%. Total revenues of $2.51 billion increased 23.6% year over year.

Operating Results

Operating income in the quarter came in at $384.4 million, up more than 100% from the prior-year quarter’s figure. Operating margin on net revenues surged to 16.9% from 2.2% in the year-ago quarter. Operating margin on total revenues also increased to 15.3% from 2% in the year-ago quarter. Adjusted EBITA came in at $405.8 million, up more than 100% from the prior-year quarter. Adjusted EBITA margin on net revenues increased to 17.9% from 9.4% in the year-ago quarter. Adjusted EBITA margin on total revenues rose to 16.2% from 8.6% in the year-ago quarter. Total operating expenses of $2.1 billion increased 7.1% year over year.

Balance Sheet

As of Jun 30, 2021, Interpublic had cash and cash equivalents of $2.34 billion compared with $2.02 billion at the end of the prior quarter. Total debt was $3.47 billion compared with $3.45 billion at the end of the prior quarter. During the second quarter, the company paid out a cash dividend of 27 cents per share, amounting to $106.1 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in fresh estimates. The consensus estimate has shifted 6.67% due to these changes.

VGM Scores

Currently, Interpublic has a subpar Growth Score of D, though it is lagging a bit 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 second quintile 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 #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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