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Interpublic Group of Companies (IPG)
NYSE:IPG
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Interpublic Group of Companies
(NYSE:IPG)
Rating:60Neutral
Price Target:
$26.00
▲(13.29%Upside)
Positive Factors
Revenue Growth
The sale of digital specialty agencies and increased principal based media offerings should help revenue trends over time.
Strategic Acquisitions
IPG management is focusing on acquiring capabilities in faster-growth areas like retail and healthcare, with a good M&A track record.
Negative Factors
Account Losses
Recent account losses remain material headwinds to growth.
Organic Growth Challenges
Uncertainty is building for IPG heading into 2025, with expected net organic growth decline of 1-2% year over year.
Valuation Risks
Analyst downgrades IPG to Underweight due to valuation risks from margins and M&A uncertainties.
Interpublic Group of Companies (IPG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.46B
Dividend Yield5.72%
Average Volume (3M)5.69M
Price to Earnings (P/E)17.5
Beta (1Y)0.83
Revenue Growth-3.18%
EPS Growth-53.36%
CountryUS
Employees51,500
SectorCommunication Services
Sector Strength83
IndustryAdvertising Agencies
Share Statistics
EPS (TTM)0.33
Shares Outstanding369,734,700
10 Day Avg. Volume9,014,749
30 Day Avg. Volume5,691,560
Financial Highlights & Ratios
PEG Ratio-0.67
Price to Book (P/B)2.61
Price to Sales (P/S)0.00
P/FCF Ratio8.87
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$32.75Price Target Upside42.70% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Interpublic Group of Companies Business Overview & Revenue Model
Company DescriptionInterpublic Group of Companies (IPG) is a leading global provider of marketing solutions. The company operates through several networks specializing in consumer advertising, digital marketing, communications planning, public relations, and specialized communications disciplines. IPG serves clients in over 100 countries, delivering strategic marketing solutions across a diverse range of industries.
How the Company Makes MoneyIPG makes money primarily through the provision of marketing and advertising services. The company's revenue model is based on charging clients for services such as creative advertising, digital marketing, public relations, and media buying. IPG often enters into long-term contracts with clients which provide a steady stream of income. Additionally, the company leverages its global network of agencies and specialized partners to offer integrated solutions that can command premium pricing. Significant factors contributing to its earnings include the ability to maintain strong client relationships, adapt to digital marketing trends, and expand its service offerings to meet the evolving needs of clients in various industries.
Interpublic Group of Companies Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: -3.00%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Neutral
The earnings call highlights IPG's progress in strategic transformation and cost savings, strong performance in select segments, and industry recognition. However, these positives are balanced by a notable decrease in organic revenue, significant restructuring charges, and challenging market conditions. While there are initiatives underway that could lead to future growth, current conditions present challenges.Q1-2025 Updates
Positive Updates
Strong Performance in Media and Growth in Select Segments
IPG Media Brands posted strong growth due to good regional new business across global markets. Notable growth was also seen with tech and telecom clients, as well as increases in food and beverage and financial services sectors.
Strategic Transformation and Cost Reduction Initiatives
IPG has made significant progress in its strategic restructuring program, identifying opportunities for transformation and structural redesign. The program is expected to yield annualized expense savings of $300-$350 million.
Share Repurchases and Strong Financial Position
IPG reinitiated share repurchases, acquiring 3.4 million shares and returning $90 million to shareholders. The company ended the quarter with $1.9 billion of cash and a strong balance sheet.
Industry Recognition and Innovation
IPG received high levels of industry recognition, with several agencies ranked as most innovative. New AI-driven solutions, such as AI Console and AGENTIC commerce solutions, were launched to enhance services.
Negative Updates
Organic Revenue Decrease
IPG reported an organic revenue decrease of 3.6% in Q1, largely due to trailing account losses impacting growth by 4.5% to 5% across geographic regions and segments.
Significant Restructuring Charges
Adjusted EBITDA margin was 9.3%, excluding restructuring charges of $203 million, which impacted reported earnings. The restructuring is aimed at achieving long-term savings but resulted in a quarterly loss.
Challenging Market Conditions
The macroeconomic environment remains volatile, with uncertainty affecting client planning and potential shifts in market conditions that could impact future revenue.
Company Guidance
In the first quarter of 2025, Interpublic Group reported an organic revenue decrease of 3.6%, attributed to significant account losses that weighed on growth by 4.5% to 5%. The company's adjusted EBITDA was $186.5 million, with a margin of 9.3%, accounting for restructuring charges of $203 million and $4.8 million in Omnicom deal expenses. Despite a diluted EPS loss of $0.23 due to restructuring, adjusted diluted EPS was $0.33. The company resumed share repurchases, buying back 3.4 million shares for $90 million. Looking ahead, Interpublic Group expects a full-year organic net revenue decrease of 1% to 2% and an adjusted EBITDA margin of 16.6%, factoring in the macroeconomic uncertainty and the ongoing integration with Omnicom, which is anticipated to generate $750 million in cost synergies by 2026.Interpublic Group of Companies Financial Statement Overview
Summary
Interpublic Group demonstrates financial stability with strong cash flow management and operational efficiency. Despite challenges in revenue growth indicated by the income statement, the balance sheet and cash flow metrics suggest a well-managed financial structure capable of supporting future growth.Income Statement
The income statement shows moderate stability with a gross profit margin of 16.44% and a net profit margin of 4.69% for the TTM period. The company has experienced a decline in revenue over the past few years, with negative revenue growth rates, indicating potential challenges in market conditions or competitive pressures. Despite this, the EBIT margin remains solid at 9.29%, demonstrating operational efficiency.68
Positive
Balance Sheet
The balance sheet is relatively robust with a debt-to-equity ratio of 0.82, reflecting a balanced approach to leveraging. With an equity ratio of 20.93%, the company maintains a healthy proportion of equity financing. However, the return on equity is modest at 13.78%, suggesting room for improvement in generating returns from shareholder equity.72
Positive
Cash Flow
The cash flow statement is strong, with a notable free cash flow to net income ratio of 2.12 and an operating cash flow to net income ratio of 2.38 for the TTM period. The free cash flow growth rate is substantial at 181.05%, indicating effective cash management and the ability to reinvest in growth opportunities.75
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 10.52B | 10.69B | 10.89B | 10.93B | 10.24B | 9.06B | Gross Profit |
| 1.73B | 1.82B | 1.81B | 1.84B | 1.85B | 1.35B | EBIT |
| 977.30M | 1.20B | 1.48B | 1.38B | 1.44B | 967.30M | EBITDA |
| 1.23B | 1.54B | 1.90B | 1.77B | 1.75B | 1.30B | Net Income Common Stockholders |
| 493.70M | 689.50M | 1.10B | 938.00M | 952.80M | 351.10M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.93B | 2.19B | 2.39B | 2.55B | 3.27B | 2.51B | Total Assets |
| 17.29B | 18.33B | 19.27B | 18.84B | 19.91B | 18.04B | Total Debt |
| 4.89B | 4.25B | 4.67B | 4.53B | 4.80B | 5.18B | Net Debt |
| 2.96B | 2.07B | 2.29B | 1.99B | 1.53B | 2.67B | Total Liabilities |
| 13.37B | 14.42B | 15.22B | 15.10B | 16.30B | 15.01B | Stockholders Equity |
| 3.82B | 3.80B | 3.94B | 3.65B | 3.53B | 2.90B |
| Cash Flow | Free Cash Flow | ||||
| 1.05B | 913.40M | 375.40M | 430.70M | 1.88B | 1.68B | Operating Cash Flow |
| 1.18B | 1.06B | 554.70M | 608.80M | 2.08B | 1.85B | Investing Cash Flow |
| -159.30M | -151.10M | -85.40M | -430.10M | -185.30M | -216.20M | Financing Cash Flow |
| -1.04B | -1.02B | -634.30M | -899.40M | -1.08B | -346.20M |
Interpublic Group of Companies Technical Analysis
Negative
22.95
Price Trends
24.44
Negative
25.66
Negative
27.44
Negative
Market Momentum
-0.42
Positive
35.50
Neutral
14.74
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IPG, the sentiment is Negative. The current price of 22.95 is below the 20-day moving average (MA) of 24.28, below the 50-day MA of 24.44, and below the 200-day MA of 27.44, indicating a bearish trend. The MACD of -0.42 indicates Positive momentum. The RSI at 35.50 is Neutral, neither overbought nor oversold. The STOCH value of 14.74 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IPG.
Interpublic Group of Companies Risk Analysis
Interpublic Group of Companies disclosed 31 risk factors in its most recent earnings report. Interpublic Group of Companies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
Because the exchange ratio is fixed and because the market prices of shares of Omnicom common stock and IPG common stock will fluctuate, IPG stockholders cannot be certain of the market value of the merger consideration they will receive in the merger or the difference between the market value of the merger consideration they will receive in the merger and the market value of their shares of IPG common stock immediately prior to the merger. Q4, 2024
2.
IPG stockholders will have reduced ownership in the combined company and less influence over management. Q4, 2024
3.
Failure to complete the merger could negatively impact the price of shares of our common stock, as well as our business and financial results. Q4, 2024
Interpublic Group of Companies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $2.34B | 84.11 | 4.30% | ― | 5.59% | ― | |
71 Outperform | $8.55B | 12.32 | 16.04% | 6.36% | 2.07% | 407.27% | |
69 Neutral | $1.40B | 10.96 | 13.46% | ― | -1.18% | 100.33% | |
69 Neutral | $13.94B | 9.78 | 36.50% | 3.92% | 5.84% | -1.17% | |
66 Neutral | $1.11B | 821.57 | 0.19% | ― | 9.86% | ― | |
61 Neutral | $14.20B | 5.93 | -4.31% | 3.70% | 2.75% | -35.73% | |
60 Neutral | $8.46B | 17.48 | 13.33% | 5.72% | -3.18% | -53.36% |
* Communication Services Sector Average
Performance Comparison
IPG
Interpublic Group of Companies
22.95
-6.39
-21.78%
STGW
Stagwell
4.27
-2.56
-37.48%
OMC
Omnicom Group
71.21
-17.00
-19.27%
WPP
WPP
39.12
-9.72
-19.90%
CRTO
Criteo SA
26.89
-11.83
-30.55%
MGNI
Magnite
16.68
3.10
22.83%
Interpublic Group of Companies Corporate Events
M&A TransactionsBusiness Operations and Strategy
Interpublic Group Merges with Omnicom Group
Neutral
Dec 9, 2024
Omnicom Group Inc. is set to merge with The Interpublic Group of Companies, Inc., transforming IPG into a wholly owned subsidiary. Shareholders of IPG will receive Omnicom stock at a specified exchange ratio, while existing IPG stock options and awards will convert into Omnicom equivalents. The merger aims to enhance innovation and operational efficiency, with strategic governance changes anticipated post-closing. However, the merger is subject to various conditions, including regulatory approvals and stockholder consent, with termination clauses and financial penalties outlined for potential non-completion scenarios.
M&A TransactionsBusiness Operations and Strategy
Interpublic Group and Omnicom Announce Strategic Merger
Positive
Dec 9, 2024
Omnicom Group Inc. and The Interpublic Group of Companies, Inc. have entered into a merger agreement, creating a powerful marketing and sales company with unmatched capabilities. This strategic move aims to combine their marketing talent and innovative services, positioning them for growth in the evolving marketing landscape. The merger is expected to enhance shareholder value through cost synergies and improved earnings per share. With a strong financial profile and advanced technology platforms, the combined entity seeks to deliver superior, data-driven outcomes for clients globally.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.