Interpublic logged a -0.8% change during today's morning session, and is now trading at a price of $38.65 per share.
Interpublic returned gains of 39.3% last year, with its stock price reaching a high of $40.95 and a low of $25.14. Over the same period, the stock outperformed the S&P 500 index by 27.0%. More recently, the company's 50-day average price was $37.67. The Interpublic Group of Companies, Inc. provides advertising and marketing services worldwide. Based in New York, NY, the large-cap Consumer Discretionary company has 58,200 full time employees. Interpublic has offered a 3.0% dividend yield over the last 12 months.
The Business Runs With Low Leverage Levels:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $10,221 | $9,061 | $10,241 | $10,928 |
| Gross Margins | 14.6% | 14.9% | 18.1% | 16.9% |
| Operating Margins | 11.0% | 11.1% | 14.1% | 13.6% |
| Net Margins | 6.42% | 3.87% | 9.3% | 8.58% |
| Net Income (MM) | $656 | $351 | $953 | $938 |
| Net Interest Expense (MM) | -165 | -163 | -143 | -111 |
| Net Interest Expense (MM) | -$165 | -$163 | -$143 | -$111 |
| Depreciation & Amort. (MM) | -$278 | -$291 | -$284 | -$274 |
| Earnings Per Share | $1.68 | $0.89 | $2.39 | $2.3 |
| EPS Growth | n/a | -47.02% | 168.54% | -3.77% |
| Diluted Shares (MM) | 391 | 393 | 398 | 386 |
| Free Cash Flow (MM) | $1,331 | $1,680 | $1,880 | $431 |
| Capital Expenditures (MM) | -$198 | -$168 | -$195 | -$178 |
| Net Current Assets (MM) | -$5,991 | -$5,638 | -$5,073 | -$4,776 |
| Current Ratio | 0.93 | 0.98 | 1.03 | 1.03 |
| Long Term Debt (MM) | $2,772 | $2,916 | $2,909 | $2,871 |
| Net Debt / EBITDA | 1.84 | 1.51 | -0.03 | 0.37 |
Interpublic benefits from low leverage, stable revenues and a flat capital expenditure trend, and average operating margins with a positive growth rate. The company's financial statements show positive EPS growth and consistent free cash flow. However, the firm has slimmer gross margins than its peers.
A Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:
Interpublic has a trailing twelve month P/E ratio of 16.4, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $3.12, the company has a forward P/E ratio of 12.1. According to the 13.2% compound average growth rate of Interpublic's historical and projected earnings per share, the company's PEG ratio is 1.24. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 9.3%. On this basis, the company's PEG ratio is 1.77. This suggests that these shares are overvalued. Furthermore, Interpublic is likely overvalued compared to the book value of its equity, since its P/B ratio of 4.19 is higher than the sector average of 3.12. The company's shares are currently trading 99.5% above their Graham number. Ultimately, Interpublic's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
Interpublic Has an Average Rating of Buy:
The 10 analysts following Interpublic have set target prices ranging from $37.0 to $45.0 per share, for an average of $40.4 with a buy rating. As of April 2023, the company is trading -6.8% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Interpublic has an average amount of shares sold short because 4.9% of the company's shares are sold short. Institutions own 101.9% of the company's shares, and the insider ownership rate stands at 0.51%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 12% stake in the company is worth $1,815,393,895.
