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Interpublic (IPG) to Report Q2 Earnings: What's in Store?

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The Interpublic Group of Companies, Inc. (IPG - Free Report) is scheduled to report second-quarter 2018 results on Jul 24, before the opening bell.

While we expect the company’s top line to do well on the back of higher organic growth across its major geographic regions and segments, strong operating discipline and lower U.S tax rates are likely to boost Interpublic’s earnings.

We observe that shares of Interpublic have gained 11.8% year to date against the industry‘s loss of 8%.

 

Top Line to Improve Year Over Year

The Zacks Consensus Estimate for net revenues in the to-be-reported quarter is pegged at $1.92 billion, indicating year-over-year growth of 1.1%. We expect the company’s top line to benefit from higher organic growth and positive impact of foreign currency movements.

The company is likely to grow organically across its major geographic regions as well as reportable segments. Organic growth in the United States is likely to come from Mediabrands, Huge and Digital, FCB, McCann, MullenLowe Group and Octagon while solid revenues from UK and Latin America is likely to drive organic growth in international markets.

In first-quarter 2018, the company’s net revenues increased 5.9% year over year. The year-over-year growth was driven by favorable foreign currency movement of 3% and organic growth of 3.6%.

Interpublic’s digital capabilities, diversified business model and geographic reach offer a distinctive competitive advantage. It continues to look for strategic investments and buyouts to expand in high-growth regions and key world markets.

Bottom Line Expectations

The Zacks Consensus Estimate for earnings per share (EPS) in the to-be-reported quarter is pegged at 43 cents, indicating year-over-year growth of 59.3%. Lower tax rates (as a result of Tax Cuts and Jobs Act), acquisitions and improvement in operating performance are likely to boost the company’s bottom line.

In first-quarter 2018, adjusted earnings declined 40% from the year-ago quarter to 3 cents per share. The company suffered losses from the sale of its certain businesses in the quarter.

Our Model Doesn’t Suggest a Beat

Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if the companies are witnessing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Interpublic has a Zacks Rank #3 and an Earnings ESP of 0.00%, a combination that makes surprise prediction difficult.

Stocks to Consider

Here are a few stocks from the broader Business Services sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings in second-quarter 2018:

IQVIA Holdings (IQV - Free Report) has an Earnings ESP of +0.25% and a Zacks Rank #2. The company is slated to report quarterly results on Jul 24. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aptiv (APTV - Free Report) has an Earnings ESP of +0.08% and a Zacks Rank #3. The company is slated to report quarterly numbers on Jul 31.

Avis Budget Group (CAR - Free Report) has an Earnings ESP of +5.17% and a Zacks Rank #1. The company is scheduled to report quarterly numbers on Aug 7.

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