WPP plc stock has been upgraded to a Zacks Rank #2 (Buy) on the back of favorable estimate revision trend based on the company’s strategic acquisition policies.
Over the last 60 days, the company’s current-year estimates have risen from $8.01 per share to $8.17 with two upward revisions.
WPP completed 14 acquisitions in the first quarter, of which seven acquisitions and investments were in new markets and 10 in quantitative and digital. The acquisitions were in accordance with the company’s strategic focus on new markets, new media and data investment management. These moves expand the geographical presence of the company and are likely to augment revenues.
The company is committed to return value to its shareholders through steady payment of dividends and stock repurchases. Dividends for 2016 represented an increase of 26.7% over the previous year with a payout ratio of 50%. The company expects to maintain its healthy dividend payout ratio, going forward. This offers an enticing potential for investors who seek a healthy return on investment. Further, the stock’s PE of 12.60x also compares favorably with the industry’s trailing 12-month PE of 15.12x. At the very least, this indicates that the stock is relatively undervalued right now compared to its peers.
WPP has outperformed the industry with an average year-to-date loss of 7.7% compared with a decline of 9.2% for the latter. WPP is one of the largest advertising companies in the world and has accumulated a vast portfolio of global and regional brands and has survived recessions in the United States, U.K and globally. It is currently well poised to grow, as the global economy is reviving with the ushering of a strong momentum in the media and advertising industry worldwide. The primary focus of the company is to grow its revenues and gross margin at a faster rate than the industry average. Its geographically superior position in new markets and functional strength in new media and data investment management will help WPP in achieving steady revenue growth, going forward.
Other Stocks to Consider
Other stocks in the sector worth a glance include LogMeIn, Inc. (LOGM - Free Report) , Syntel, Inc. and ManTech International Corporation (MANT - Free Report) . All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
LogMeIn has long-term earnings growth expectations of 17.5% and is currently trading at a forward P/E of 37.56x.
Syntel has long-term earnings growth expectations of 9.3% and is currently trading at a forward P/E of 10.75x.
ManTech has long-term earnings growth expectations of 8% and is currently trading at a forward P/E of 26.05x.
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