We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Interpublic Benefits From Buyout Strategy Amid Seasonality Constraints
Read MoreHide Full Article
The Interpublic Group of Companies, Inc. (IPG - Free Report) is benefiting from its diverse workforce and acquisition plan, which enable it to tackle market dynamics. While high liquidity and rising dividend payments act as tailwinds, client concentration and seasonality overshadow IPG’s performance.
IPG reported third-quarter 2024 results, with earnings meeting the Zacks Consensus Estimate but revenues missing the same. Adjusted earnings (excluding 65 cents from non-recurring items) of 70 cents per share met the Zacks Consensus Estimate and was flat with the year-ago quarter. Revenues before billable expenses (net revenues) of $2.2 billion missed the consensus estimate by 2.3% and declined 16.2% year over year. Total revenues of $2.6 billion fell 1.9% year over year and outpaced the Zacks Consensus Estimate of $2.3 billion.
How is Interpublic Doing?
Interpublic’s rising diverse workforce provides it with a competitive edge. The company continues to attract, hire and develop strategic, creative and digital talent from diverse domains to increase organic growth, and strengthen its grounds in international markets.
IPG’s buyout strategy is focused on high-growth capacities and geographies. It has been acquiring and investing in companies across the globe to expand its product portfolio, and deal with dynamic marketing services and media prospects.
In recent years, the company has acquired agencies across the marketing spectrum, including data, technology, e-commerce and healthcare communication, with full-service capacities. It completed two acquisitions in 2023, one in 2022, four in 2020, one in 2019 and five in 2018.
Interpublic’s current ratio (a measure of liquidity) at the end of the third quarter of 2024 was 1.09, higher than the industry's 1.04. It has risen from the preceding quarter’s 1.07 and the year-ago quarter's 1.04. A current ratio of more than 1 often suggests that the company will easily pay off its short-term obligations.
Image Source: Zacks Investment Research
In 2023, 2022 and 2021, Interpublic paid out $479.1 million, $457.3 million and $427.7 million in dividends, respectively. Such strategies point to the company’s commitment to creating value for shareholders and underline its confidence in its business, boosting its bottom line.
Risks Faced by IPG
Client concentration can act as a huge obstacle to Interpublic’s business. The company's top ten clients accounted for almost 20% of net revenues in 2023 and 2022. This suggests that IPG heavily relies on its larger clients for a significant proportion of its top line.
Seasonality affects Interpublic’s cash position. This is because of clients’ fluctuating annual media spending budgets and changing media spending trends, which vary across the year with different localities.
Image: Bigstock
Interpublic Benefits From Buyout Strategy Amid Seasonality Constraints
The Interpublic Group of Companies, Inc. (IPG - Free Report) is benefiting from its diverse workforce and acquisition plan, which enable it to tackle market dynamics. While high liquidity and rising dividend payments act as tailwinds, client concentration and seasonality overshadow IPG’s performance.
IPG reported third-quarter 2024 results, with earnings meeting the Zacks Consensus Estimate but revenues missing the same. Adjusted earnings (excluding 65 cents from non-recurring items) of 70 cents per share met the Zacks Consensus Estimate and was flat with the year-ago quarter. Revenues before billable expenses (net revenues) of $2.2 billion missed the consensus estimate by 2.3% and declined 16.2% year over year. Total revenues of $2.6 billion fell 1.9% year over year and outpaced the Zacks Consensus Estimate of $2.3 billion.
How is Interpublic Doing?
Interpublic’s rising diverse workforce provides it with a competitive edge. The company continues to attract, hire and develop strategic, creative and digital talent from diverse domains to increase organic growth, and strengthen its grounds in international markets.
IPG’s buyout strategy is focused on high-growth capacities and geographies. It has been acquiring and investing in companies across the globe to expand its product portfolio, and deal with dynamic marketing services and media prospects.
In recent years, the company has acquired agencies across the marketing spectrum, including data, technology, e-commerce and healthcare communication, with full-service capacities. It completed two acquisitions in 2023, one in 2022, four in 2020, one in 2019 and five in 2018.
Interpublic’s current ratio (a measure of liquidity) at the end of the third quarter of 2024 was 1.09, higher than the industry's 1.04. It has risen from the preceding quarter’s 1.07 and the year-ago quarter's 1.04. A current ratio of more than 1 often suggests that the company will easily pay off its short-term obligations.
In 2023, 2022 and 2021, Interpublic paid out $479.1 million, $457.3 million and $427.7 million in dividends, respectively. Such strategies point to the company’s commitment to creating value for shareholders and underline its confidence in its business, boosting its bottom line.
Risks Faced by IPG
Client concentration can act as a huge obstacle to Interpublic’s business. The company's top ten clients accounted for almost 20% of net revenues in 2023 and 2022. This suggests that IPG heavily relies on its larger clients for a significant proportion of its top line.
Seasonality affects Interpublic’s cash position. This is because of clients’ fluctuating annual media spending budgets and changing media spending trends, which vary across the year with different localities.
Interpublic’s Zacks Rank & Stocks to Consider
IPG carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader Zacks Business Services sector are AppLovin (APP - Free Report) and Climb Global Solutions, Inc. (CLMB - Free Report) .
AppLovin sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
APP has a long-term earnings growth expectation of 20%. It delivered a trailing four-quarter earnings surprise of 26.2%, on average.
Climb Global Solutions flaunts a Zacks Rank of 1 at present. The company has a long-term earnings growth expectation of 16%.
CLMB delivered a trailing four-quarter earnings surprise of 51.1%, on average.