​Ad Wars: WPP’s Woes Could Help Interpublic Group

MoneyShow  |


The Interpublic Group of Companies (IPG) is a large conglomerate of advertising, marketing, communications and public relations companies serving all global markets; its clients include Alphabet (AAPL), Microsoft (MSFT) and Coca-Cola (KO), notes Crista Huff, editor of Cabot Undervalued Stocks Report.

Interpublic is in a position to benefit from a shift in professional equity portfolios as portfolio managers ponder the resignation of the CEO at WPP (WPP).

WPP is a competitor with less attractive EPS growth than Interpublic and a bearish price chart. Money flowing from WPP to IPG could certainly enhance IPG’s total return potential in 2018.

Interpublic reported $0.03 first quarter EPS on April 27, when the market was expecting $0.05. Quarterly revenue of $2.17 billion far surpassed the consensus estimate of $1.82 billion, and included upside surprises to both U.S. and international revenue expectations. Interpublic’s profits are seasonally slow in the first quarter and highest in the fourth quarter.

For comparison, the fourth quarter 2018 consensus EPS estimate is $0.91. Interpublic’s peers Omnicom Group (OMC) and Publicis Groupe S.A. (PUBGY) also delivered bigger-than-expected first quarter revenue, but Interpublic’s revenue growth surpassed them both.

The company foresees 2% to 3% organic growth of net revenue in 2018 and increasing operating margins. Wall Street expects full-year 2018 EPS to grow 22.0%, and the P/E is 13.7. Interpublic repurchased $55 million of its stock during the first quarter.

IPG is an undervalued growth & income stock with an attractive rising annual dividend. The stock yields 3.5%. Interpublic is trading near its former high of $25 from July 2017. I expect additional capital gains in 2018, and will likely sell later this year if 2019 earnings projections don’t increase. Strong Buy.

Crista Huff is editor of the Cabot Undervalued Stocks Report.

Subscribe to Crista Huff's Cabot Undervalued Stocks Report here…

About MoneyShow.com: Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 222.73 2.08 0.94 38,612,816 Trade
OMC Omnicom Group Inc. 76.03 -1.52 -1.96 4,459,407 Trade
IPG Interpublic Group of Companies Inc. (The) 24.16 -0.28 -1.15 5,039,942 Trade
KO Coca-Cola Company (The) 46.36 0.39 0.85 17,096,812 Trade
MSFT Microsoft Corporation 108.10 -1.53 -1.40 43,492,054 Trade
PUBGY Publicis Groupe S.A. ADR (Sponsored) 15.55 0.04 0.26 78,060

Comments

Emerging Growth

Lomiko Metals Inc.

Lomiko Metals Inc is an exploration stage company. It is engaged in the acquisition, exploration and development of resource properties. Its projects include Vines Lake project and Quatre - Milles…