Interpublic Group of (NYSE:IPG) Q3 2020 Earnings Preview

in EARNINGS/INVESTING IDEAS by

The Interpublic Group of Companies, Inc. (NYSE:IPG) is scheduled to report Q3 earnings results on October 21, 2020.

The company is expected to report earnings of $0.33/share on revenue of $1.878 billion. The consensus earnings per share (EPS) of $0.33/share is based on a poll of 9 analysts and represents a decline in eps of −32.4% over the same quarter last year, when the company reported earnings of $0.49/share.

The revenue forecast of $1.878 billion based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −8.9%. Last year the company reported $2.061 billion in revenue for the quarter.

Expected to report EPS contraction of −32.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,877.98 $2,061.40 −8.9%
EPS $0.33 $0.49 −32.4%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from The Interpublic Group of Companies, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.20 $0.23 14.3% Beat
Q1, 2020 $0.09 $0.11 21.8% Beat
Q4, 2019 $0.83 $0.88 6.0% Beat
Q3, 2019 $0.47 $0.49 3.7% Beat
Q2, 2019 $0.44 $0.46 3.6% Beat
Q1, 2019 $0.05 $0.11 111.2% Beat
Q4, 2018 $0.79 $0.89 13.0% Beat
Q3, 2018 $0.46 $0.48 5.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price remains flat.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $18.41 $18.41 0.0% No Change
April 22, 2020 $14.03 $14.70 4.8% Increase
February 12, 2020 $23.25 $25.06 7.8% Increase
October 22, 2019 $20.80 $21.40 2.9% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.31, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.31 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

The Interpublic Group of Companies, Inc. is currently trading at $18.32/share, up 0.4% for the day. The company is trading at approximately 72.7% of its 52-week high of $25.20/share. The company’s stock price is down −0.5% since the last earnings report and down −1.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 55.56 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:IPG Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 15.76 and a forward P/E multiple of 12.46.

The Interpublic Group of Companies, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.92. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $18.32
P/E Ratio 15.8x
P/E Ratio (Fwd) 12.5x
PEG Ratio −0.5
Total Debt / Total Capital 43.3%
Levered Free Cash Flow $775.7 million
EV / EBITDA 9.3x

Finbox

The Interpublic Group of Companies, Inc. is a mid-cap stock with a market capitalization of $7.12 billion and a total enterprise value of $11.803 billion. The company operates in the Communication Services sector and the Media industry.

The Interpublic Group of Companies, Inc. provides advertising and marketing services worldwide. The company operates through two segments, Integrated Agency Networks and Constituency Management Group. The company offers consumer advertising, digital marketing, communications planning and media buying, public relations, and specialized communications disciplines, as well as data management services. It also provides various diversified services, including meeting and event production, sports and entertainment marketing, corporate and brand identity, and strategic marketing consulting. The company was formerly known as McCann-Erickson Incorporated and changed its name to The Interpublic Group of Companies, Inc. in January 1961. The Interpublic Group of Companies, Inc. was founded in 1902 and is headquartered in New York, New York.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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