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Interpublic (IPG) Stock Up 14.1% Year to Date: Here's Why

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Shares of The Interpublic Group of Companies, Inc. (IPG - Free Report) have gained 14.1% year to date against 7.8% decline of the industry it belongs to. 


Catalysts Behind the Upside

Solid Business Model

Interpublic’s digital capabilities, diversified business model and geographic reach offer a distinctive competitive advantage. The company is expected to achieve targeted levels in the coming quarters based on diversification across emerging regions and collaboration/integration across agencies through technological improvement. It continues to look for strategic investments/acquisitions to expand in high-growth regions and key world markets.

Robust Organic Growth

Interpublic looks strong on the back of higher organic revenue growth. In the second quarter of 2018, organic growth was 4.6% in the United States and 7.2% in international markets. Notably, organic growth resulted in a 5.6% increase in total revenues in the quarter. It marked an improvement from 3.6% organic growth in first-quarter 2018 and 3.3% organic growth in fourth-quarter 2017. Further, Interpublic raised its full-year 2018 target for organic net revenue growth. The company now expects organic revenue growth of 4% to 4.5% compared with the previous expectation of 2% to 3%.

Strategic Buyouts

Interpublic has been continuously acquiring and investing in companies globally to expand its product portfolio, thereby trying to adapt to rapidly changing marketing services and media market. So far this year, the company completed two acquisitions— Brazil-based digital marketing and technology agency, Cappuccino and London-based social creative agency — That Lot through its subsidiary, Weber Shandwick. In July, it inked a deal to purchase Acxiom Marketing Solutions (AMS) from Arkansas-based database marketing company — Acxiom Corporation.

In recent years, Interpublic has acquired agencies across the marketing spectrum, which includes firms specializing in digital, mobile marketing, social media, healthcare communications and public relations, as well as agencies with full-service capabilities.

Zacks Rank & Stocks to Consider

Currently, Interpublic is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some top-ranked stocks in the broader Business Services sector include CRA International , FTI Consulting (FCN - Free Report) and NV5 Global (NVEE - Free Report) . While CRA International and FTI Consulting sport a Zacks Rank #1, NV5 Global carries a Zacks Rank #2 (Buy).

CRA International, FTI Consulting and NV5 Global have an impressive earnings surprise history, having delivered an average four-quarter surprise of 38.6%, 58.3% and 12.7%, respectively.

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