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Interpublic (IPG) Down 0.8% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Interpublic Group (IPG - Free Report) . Shares have lost about 0.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Interpublic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Interpublic Tops Q1 Earnings & Revenue Estimates

Interpublic reported solid first-quarter 2019 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of 11 cents per share beat the Zacks Consensus Estimate by 5 cents and improved on a year-over-year basis. Net revenues of $2.00 billion beat the consensus estimate by $48 million and increased 13% on a year-over-year basis. The top line benefited from organic revenue growth of 6.4% and positive impact of 9.4% from acquisitions, which were, however, partially offset by a negative impact of 2.8% from foreign currency movement.

In the reported quarter, the company witnessed organic net revenue growth of 5.7% in the United States and 7.7% in international markets, driven by a combination of net client wins and net higher spending from existing clients. Total revenues of $2.36 billion increased 8.9% year over year.

Operating Results

Operating income in first-quarter 2019 came in at $50.2 million compared with $38.8 million in the prior-year quarter. Operating margin on net revenues increased to 2.5% from 2.2% in the year-ago quarter. Operating margin on total revenues rose to 2.1% from 1.8% in the year-ago quarter.

Adjusted EBITA came in at $103.6 million compared with $44.1 million at the end of prior-year quarter. Adjusted EBITA margin on net revenues rose to 5.2% from 2.5% in the year-ago quarter.

Total operating expenses of $2.31 billion decreased 8.5% year over year.

Balance Sheet

As of Mar 31, 2019, Interpublic had cash and cash equivalents of $630.5 million compared with $673.4 million at the end of the prior quarter. Total debt was $3.94 billion compared with $3.73 billion at the end of the prior quarter.

Dividend Payment

During the reported quarter, the company declared and paid a cash dividend of 23.5 cents per share for a total of $90.6 million.

2019 Outlook

Interpublic reaffirmed its full-year 2019 guidance. The company continues to expect organic revenue growth of 2-3% and adjusted EBITA margin expansion of 40-50 basis points in 2019.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Interpublic has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Interpublic has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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