Have you been paying attention to shares of Interpublic Group of Companies, (IPG - Free Report) ? Shares have been on the move with the stock up 4.2% over the past month. The stock hit a new 52-week high of $24.04 in the previous session. Interpublic Group of Companies, has gained 2.8% since the start of the year compared to the 5.3% move for the Zacks Business Services sector and the -1.7% return for the Zacks Advertising and Marketing industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 22, 2019, Interpublic reported EPS of $0.49 versus consensus estimate of $0.48 while it beat the consensus revenue estimate by 17.68%.
For the current fiscal year, Interpublic is expected to post earnings of $2.01 per share on $8.58 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $2.1 per share on $8.68 billion in revenues. This represents a year-over-year change of 6% and 1.22%, respectively.
Interpublic may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Interpublic has a Value Score of B. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 11.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 9X versus its peer group's average of 5.6X. Additionally, the stock has a PEG ratio of 2.27. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Interpublic currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Interpublic fits the bill. Thus, it seems as though Interpublic shares could have a bit more room to run in the near term.
How Does Interpublic Stack Up to the Competition?
Shares of Interpublic have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Publicis Groupe SA (PUBGY - Free Report) , Omnicom Group (OMC - Free Report) , and Global Payments (GPN - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 23% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Interpublic, even beyond its own solid fundamental situation.