Why Interpublic Group of Companies (IPG) Stock Is Up Today

NEW YORK (TheStreet) -- Interpublic Group of Companies  (IPG) rose Tuesday after the global advertising holding company reported first-quarter results that surpassed analysts' expectations.

Revenue rose 6.1% to $1.64 billion, which beat analysts' expectation of $1.60 billion, according to Thomson Reuters I/B/E/S. International revenue also increased 7.7% after declines for three quarters. Organic revenue grew 6.6% and the company said in a statement it is on pace to meet or exceed its 2014 target of 3% to 4% organic growth, as well as operating margin of at least 10.3%.

Interpublic also reported net loss attributable to common shareholders of $20.9 million, or 5 cents a share. Analysts expected a loss of 8 cents per share.

The stock rose 3.85% to $17.52 at 10:49 a.m.

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Separately, TheStreet Ratings team rates INTERPUBLIC GROUP OF COS as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTERPUBLIC GROUP OF COS (IPG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 2.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $1,023.30 million or 27.51% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.98%.
  • Compared to its closing price of one year ago, IPG's share price has jumped by 28.63%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The debt-to-equity ratio is somewhat low, currently at 0.75, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
  • INTERPUBLIC GROUP OF COS's earnings per share declined by 35.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, INTERPUBLIC GROUP OF COS reported lower earnings of $0.59 versus $0.95 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.59).
  • You can view the full analysis from the report here: IPG Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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