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Interpublic (IPG) Misses Q3 Earnings and Revenue Estimates
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The Interpublic Group of Companies, Inc.’s (IPG - Free Report) third-quarter 2023 earnings and revenues missed the Zacks Consensus Estimate.
Adjusted earnings (considering 7 cents from non-recurring items) were 70 cents per share, which lagged the consensus estimate by 6.7%, but increased 11.1% on a year-over-year basis.
Net revenues of $2.31 billion missed the consensus estimate by 3.3%. In the year-ago quarter, IPG’s net revenues were $2.3 billion.Total revenues of $2.68 billion increased 1.5% year over year.
Interpublic Group of Companies, Inc. (The) Price, Consensus and EPS Surprise
The operating income in the quarter came in at $376.8 million, which increased 10.2% from the prior-year quarter’s levels but was lower than our expected $404.1 million. The operating margin on net revenues increased to 16.3% from 14.9% in the year-ago quarter and exceeded our estimated 14.6%. The operating margin on total revenues also increased to 14.1% from 13% in the year-ago quarter.
Adjusted EBITA was $397.2 million, increasing 11.5% from the prior-year quarter’s level but missing our estimated $457.2 million. Adjusted EBITA margin on net revenues increased to 17.2% from 15.5% in the year-ago quarter and beat our estimated 15.4%. Total operating expenses of $2.3 billion decreased 0.3% year over year.
Balance Sheet & Cash Flow
As of Sep 30, 2023, Interpublic had cash and cash equivalents of $1.57 billion, down from $1.63 billion held a quarter ago. Total debt was $3.20 billion, which was the same as of the end of the previous quarter.
For the third quarter of 2023, IPG repurchased 2.6 million shares at an average cost of $36.4 per share, totaling $91 million including fees. In the reported quarter, IPG declared and paid out a common stock cash dividend of 31 cents per share to a total of $118.6 million.
2023 Guidance
The company expects organic net revenues to grow at around 1-2%.
The adjusted EBITA margin is still expected to be 16.7%.
The following better-ranked stocks from the Business Services sector are worth consideration:
Automatic Data (ADP - Free Report) currently has a Zacks Rank #2 (Buy). It outpaced the Zacks Consensus Estimate in all trailing four quarters, the average surprise being 3.1%. The consensus estimate for fiscal 2023 revenues and earnings implies growth of 6.3% and 11.1%, respectively.
Broadridge (BR - Free Report) currently carries a Zacks Rank of 2. It surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed once and matched on one instance, the average surprise being 0.5%. The consensus estimate for fiscal 2024 revenues and earnings suggests growth of 7.2% and 8.8%, respectively.
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Interpublic (IPG) Misses Q3 Earnings and Revenue Estimates
The Interpublic Group of Companies, Inc.’s (IPG - Free Report) third-quarter 2023 earnings and revenues missed the Zacks Consensus Estimate.
Adjusted earnings (considering 7 cents from non-recurring items) were 70 cents per share, which lagged the consensus estimate by 6.7%, but increased 11.1% on a year-over-year basis.
Net revenues of $2.31 billion missed the consensus estimate by 3.3%. In the year-ago quarter, IPG’s net revenues were $2.3 billion.Total revenues of $2.68 billion increased 1.5% year over year.
Interpublic Group of Companies, Inc. (The) Price, Consensus and EPS Surprise
Interpublic Group of Companies, Inc. (The) price-consensus-eps-surprise-chart | Interpublic Group of Companies, Inc. (The) Quote
Operating Results
The operating income in the quarter came in at $376.8 million, which increased 10.2% from the prior-year quarter’s levels but was lower than our expected $404.1 million. The operating margin on net revenues increased to 16.3% from 14.9% in the year-ago quarter and exceeded our estimated 14.6%. The operating margin on total revenues also increased to 14.1% from 13% in the year-ago quarter.
Adjusted EBITA was $397.2 million, increasing 11.5% from the prior-year quarter’s level but missing our estimated $457.2 million. Adjusted EBITA margin on net revenues increased to 17.2% from 15.5% in the year-ago quarter and beat our estimated 15.4%. Total operating expenses of $2.3 billion decreased 0.3% year over year.
Balance Sheet & Cash Flow
As of Sep 30, 2023, Interpublic had cash and cash equivalents of $1.57 billion, down from $1.63 billion held a quarter ago. Total debt was $3.20 billion, which was the same as of the end of the previous quarter.
For the third quarter of 2023, IPG repurchased 2.6 million shares at an average cost of $36.4 per share, totaling $91 million including fees. In the reported quarter, IPG declared and paid out a common stock cash dividend of 31 cents per share to a total of $118.6 million.
2023 Guidance
The company expects organic net revenues to grow at around 1-2%.
The adjusted EBITA margin is still expected to be 16.7%.
Currently, Interpublic carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Stocks to Consider
The following better-ranked stocks from the Business Services sector are worth consideration:
Automatic Data (ADP - Free Report) currently has a Zacks Rank #2 (Buy). It outpaced the Zacks Consensus Estimate in all trailing four quarters, the average surprise being 3.1%. The consensus estimate for fiscal 2023 revenues and earnings implies growth of 6.3% and 11.1%, respectively.
Broadridge (BR - Free Report) currently carries a Zacks Rank of 2. It surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed once and matched on one instance, the average surprise being 0.5%. The consensus estimate for fiscal 2024 revenues and earnings suggests growth of 7.2% and 8.8%, respectively.