Interpublic (IPG) Q2 Earnings Match Estimates, Revenues Top

The Interpublic Group of Companies, Inc. IPG reported decent second-quarter 2018 results wherein the bottom line met the Zacks Consensus Estimate and the top line surpassed the same.

Adjusted earnings per share (EPS) of 43 cents came in line with the Zacks Consensus Estimate and increased 43.3% year over year.

Total revenues of $2.39 billion beat the consensus mark by $486.4 million and improved 9.4% year over year. The year-over-year growth was driven by favorable foreign currency impact of 1.4% and organic growth of 5.6%. There was a negative impact of 0.8% from net divestures.

Interpublic Group of Companies, Inc. (The) Revenue (TTM)

 

Interpublic Group of Companies, Inc. (The) Revenue (TTM) | Interpublic Group of Companies, Inc. (The) Quote

Net revenues of $1.95 billion were up 6.2% from the year-ago quarter. Interpublic witnessed organic growth of 4.6% in the United States and 7.2% in international markets.

Shares of the company were up 6.14% in pre-market trading at the time of writing. Year to date, we observe that shares of Interpublic have gained 9% against the industry‘s decline of 9.2%.

 

Operating Results

Operating income in second-quarter 2018 came in at $249.2 million, up 10.4% year over year. Operating margin on net revenues was 12.8% compared with 12.3% in the year-ago quarter. Operating margin on total revenues was 10.4% compared with 10.3% in the year-ago quarter.Total operating expenses increased 9.3% year over year to $2.14 billion.

Balance Sheet

Interpublic exited the first half of 2018 with cash, cash equivalents and marketable securities of $493.3 million, compared with $791 million at the end of 2017. As of Jun 30, 2018, total debt was $2.04 billion compared with $1.37 billion at the end of 2017.

Share Repurchase and Dividend

During the second quarter of 2018, the company repurchased 2.6 million shares at an aggregate cost of $59.6 million and an average price of $23.43 per share, including fees. In the first half of 2018, the company repurchased 5.0 million shares of its common stock at an aggregate cost of $114.5 million and an average price of $23.02 per share, including fees.

In the reported quarter, the company also declared and paid a cash dividend of $21 cents per share, aggregating $80.4 million.

2018 Outlook

Interpublic raised its full year target for organic net revenue growth. The company now expects organic revenue growth of 4% to 4.5% compared with the previous expectation of 2% to 3%. Operating margin expansion of 60 to 70 basis points has been reaffirmed.

Zacks Rank & Upcoming Releases

Interpublic currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the  broader Business Services sector are keenly awaiting second-quarter earnings reports from key players like Republic Services RSG, S&P Global SPGI  and FTI Consulting FCN.  All the companies are slated to report their quarterly numbers on Jul 26.

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