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.
| 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!
| 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.
| 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.
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:
| 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 |
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.
