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Interpublic (IPG) Tops Q3 Earnings Estimates, '18 View Intact

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The Interpublic Group of Companies, Inc. (IPG - Free Report) reported solid third-quarter 2018 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of 48 cents per share beat the Zacks Consensus Estimate by 2 cents and improved on a year-over-year basis.

Net revenues of $1,895.7 million beat the consensus mark by 15 million and increased 3.4% year over year. The year-over-year growth was driven by organic revenue growth of 5.4%, which was partially offset by a negative impact of 1.3% from foreign currency movement and 0.7% from net divestitures.

Interpublic witnessed organic net revenue growth of 5% in the United States and 6% in international markets. Total revenues of $2,297.5 million increased 4.0% from the year-ago quarter.

Interpublic completed the acquisition of Acxiom LLC on Oct 1, 2018.

So far this year, shares of Interpublic have gained 11.5% against the 9.6% decline recorded by the industry it belongs to.

 

Operating Results

Operating income in third-quarter 2018 was $261.7 million, up 2.6% year over year. Operating margin on net revenues was 13.8% compared with 13.9% in the year-ago quarter. Operating margin on total revenues was 11.4% compared with 11.5% in the year-ago quarter. Total operating expenses declined 4.2% year over year to $2,035.8 million.

Balance Sheet

As of Sep 30, 2018, Interpublic had cash, cash equivalents and marketable securities of $1,860.3 million compared with $791 million at the end of 2017. Total debt was $3.34 billion as of Sep 30, 2018, compared with $1.37 billion at the end of 2017.

Share Repurchase and Dividend

During the third quarter of 2018, Interpublic repurchased 0.1 million shares at an aggregate cost of $2.6 million and an average price of $23.56 per share, including fees. In the first nine months of 2018, it repurchased 5.1 million shares of its common stock at an aggregate cost of $117.1 million and an average price of $23.03 per share, including fees.

In the reported quarter, the company declared and paid a cash dividend of 21 cents per share, totaling $80.4 million.

2018 Outlook

Interpublic reaffirmed its full-year guidance. The company expects organic revenue growth of 4-4.5% and operating margin expansion of 60-70 basis points.

Zacks Rank & Upcoming Releases

Currently, Interpublic carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Business Services sector are keenly awaiting earnings reports of key players like Automatic Data Processing (ADP - Free Report) , Waste Management (WM - Free Report) and Republic Services (RSG - Free Report) . While Automatic Data Processing will report first-quarter fiscal 2019 results on Oct 31, Waste Management and Republic Services will release third-quarter 2018 results on Oct 25.

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