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Here's Why You Should Retain IPG Stock in Your Portfolio for Now

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The Interpublic Group of Companies, Inc.’s (IPG - Free Report) diverse workforce fuels organic growth. It conducts multiple acquisitions and investments across years to expand its product portfolio and deal with a dynamic market. IPG has a strong liquidity position. However, seasonality affects the company’s revenue generation.

The IPG stock has gained 9.6% in the past three months. It has underperformed the 10.3% rise of the industry but outperformed the 2.7% growth of the Zacks S&P 500 composite.

Factors That Auger Well for IPG’s Success

Interpublic Group’s rising diverse workforce provides a competitive edge. IPG continues to attract, hire and develop strategic, creative and digital talent from different backgrounds to propel organic growth and strengthen its presence across the globe.

IPG has an acquisition strategy that is focused on high-growth capacities and geographies. To expand its product portfolio and tackle the dynamic marketing services and media prospects, IPG has been inclined toward frequent acquisitions and investments.

Recently, Interpublic Group acquired companies across different domains, including marketing, technology, e-commerce and healthcare communication, and agencies with full-service capacities. The company has completed two acquisitions in 2023, one in 2022, four acquisitions in 2020, one in 2019 and five in 2018.

Interpublic’s current ratio (a measure of liquidity) at the end of the second quarter of 2024 was 1.07, higher than the preceding quarter’s 1.06 and the year-ago quarter's 1.03. A current ratio of more than 1 often indicates that it will be an easy affair for the company to pay off short-term obligations.

The IPG stock is appealing to dividend-seeking investors. In 2023, 2022 and 2021, Interpublic Group paid out $479.1 million, $457.3 million and $427.7 million in dividends, respectively.  Such actions indicate the company’s commitment to creating value for shareholders, thereby attracting investors and instilling confidence in the business.

Risk Faced by Interpublic Group

Seasonality weighs on Interpublic Group’s cash position due to dynamic annual media spending budgets and changing media expense patterns in different areas. The company observes seasonality in the first nine months of a year and experiences the biggest impact in the first quarter.

Zacks Rank & Stocks to Consider

IPG has a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the broader Zacks Business Services sector are Republic Services (RSG - Free Report) and Shift4 Payments (FOUR - Free Report) .

Republic Services carries a Zacks Rank of 2 (Buy) at present. It has a long-term earnings growth expectation of 10.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

RSG delivered a trailing four-quarter earnings surprise of 7.6%, on average.

Shift4 Payments carries a Zacks Rank of 2 at present. It has a long-term earnings growth expectation of 29.8%.

FOUR delivered a trailing four-quarter earnings surprise of 1%, on average.


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