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INTERPUBLIC GROUP OF COS INC

New York Stock Exchange, Inc. / Communication Services / Media

Fundamental Rating

6

We assign a fundamental rating of 6 out of 10 to IPG. IPG was compared to 91 industry peers in the Media industry. IPG scores excellent on profitability, but there are some minor concerns on its financial health. IPG has a valuation in line with the averages, but on the other hand it scores bad on growth. Finally IPG also has an excellent dividend rating. These ratings would make IPG suitable for dividend investing!



8

1. Profitability

1.1 Basic Checks

In the past year IPG was profitable.
IPG had a positive operating cash flow in the past year.
Each year in the past 5 years IPG has been profitable.
IPG had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

IPG's Return On Assets of 4.73% is fine compared to the rest of the industry. IPG outperforms 78.89% of its industry peers.
The Return On Equity of IPG (21.69%) is better than 90.00% of its industry peers.
The Return On Invested Capital of IPG (13.18%) is better than 94.44% of its industry peers.
The Average Return On Invested Capital over the past 3 years for IPG is significantly above the industry average of 6.91%.
The 3 year average ROIC (12.64%) for IPG is below the current ROIC(13.18%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 4.73%
ROE 21.69%
ROIC 13.18%
ROA(3y)5.16%
ROA(5y)4.22%
ROE(3y)26.87%
ROE(5y)23.27%
ROIC(3y)12.64%
ROIC(5y)11.46%

1.3 Margins

With a decent Profit Margin value of 7.44%, IPG is doing good in the industry, outperforming 74.44% of the companies in the same industry.
IPG's Profit Margin has improved in the last couple of years.
IPG's Operating Margin of 13.60% is fine compared to the rest of the industry. IPG outperforms 76.67% of its industry peers.
In the last couple of years the Operating Margin of IPG has grown nicely.
IPG's Gross Margin of 17.01% is on the low side compared to the rest of the industry. IPG is outperformed by 81.11% of its industry peers.
IPG's Gross Margin has improved in the last couple of years.
Industry RankSector Rank
OM 13.6%
PM (TTM) 7.44%
GM 17.01%
OM growth 3Y7.18%
OM growth 5Y5.56%
PM growth 3Y37.58%
PM growth 5Y9.62%
GM growth 3Y3.74%
GM growth 5Y3.27%

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5

2. Health

2.1 Basic Checks

IPG has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
IPG has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, IPG has less shares outstanding
IPG has a worse debt/assets ratio than last year.

2.2 Solvency

Based on the Altman-Z score of 1.80, we must say that IPG is in the distress zone and has some risk of bankruptcy.
IPG's Altman-Z score of 1.80 is fine compared to the rest of the industry. IPG outperforms 68.89% of its industry peers.
The Debt to FCF ratio of IPG is 3.19, which is a good value as it means it would take IPG, 3.19 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 3.19, IPG belongs to the top of the industry, outperforming 85.56% of the companies in the same industry.
IPG has a Debt/Equity ratio of 0.79. This is a neutral value indicating IPG is somewhat dependend on debt financing.
IPG has a Debt to Equity ratio of 0.79. This is comparable to the rest of the industry: IPG outperforms 47.78% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.79
Debt/FCF 3.19
Altman-Z 1.8
ROIC/WACC1.57
WACC8.42%

2.3 Liquidity

A Current Ratio of 1.09 indicates that IPG should not have too much problems paying its short term obligations.
With a Current ratio value of 1.09, IPG is not doing good in the industry: 68.89% of the companies in the same industry are doing better.
A Quick Ratio of 1.09 indicates that IPG should not have too much problems paying its short term obligations.
IPG's Quick ratio of 1.09 is on the low side compared to the rest of the industry. IPG is outperformed by 67.78% of its industry peers.
Industry RankSector Rank
Current Ratio 1.09
Quick Ratio 1.09

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3

3. Growth

3.1 Past

IPG shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.74%.
IPG shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 9.11% yearly.
Looking at the last year, IPG shows a small growth in Revenue. The Revenue has grown by 0.06% in the last year.
Measured over the past years, IPG shows a small growth in Revenue. The Revenue has been growing by 2.31% on average per year.
EPS 1Y (TTM)6.74%
EPS 3Y17.83%
EPS 5Y9.11%
EPS Q2Q%0%
Revenue 1Y (TTM)0.06%
Revenue growth 3Y6.32%
Revenue growth 5Y2.31%
Sales Q2Q%-2.87%

3.2 Future

Based on estimates for the next years, IPG will show a small growth in Earnings Per Share. The EPS will grow by 3.30% on average per year.
The Revenue is expected to grow by 1.31% on average over the next years.
EPS Next Y0.88%
EPS Next 2Y-0.82%
EPS Next 3Y1.37%
EPS Next 5Y3.3%
Revenue Next Year0.48%
Revenue Next 2Y-0.6%
Revenue Next 3Y0.03%
Revenue Next 5Y1.31%

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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6

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 10.02, the valuation of IPG can be described as very reasonable.
IPG's Price/Earnings ratio is a bit cheaper when compared to the industry. IPG is cheaper than 80.00% of the companies in the same industry.
IPG is valuated cheaply when we compare the Price/Earnings ratio to 27.55, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 10.25, which indicates a very decent valuation of IPG.
78.89% of the companies in the same industry are more expensive than IPG, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of IPG to the average of the S&P500 Index (24.00), we can say IPG is valued rather cheaply.
Industry RankSector Rank
PE 10.02
Fwd PE 10.25

4.2 Price Multiples

73.33% of the companies in the same industry are more expensive than IPG, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of IPG indicates a somewhat cheap valuation: IPG is cheaper than 72.22% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 11.53
EV/EBITDA 6.88

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
IPG has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)11.42
PEG (5Y)1.1
EPS Next 2Y-0.82%
EPS Next 3Y1.37%

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8

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 4.61%, IPG is a good candidate for dividend investing.
IPG's Dividend Yield is rather good when compared to the industry average which is at 4.43. IPG pays more dividend than 88.89% of the companies in the same industry.
IPG's Dividend Yield is rather good when compared to the S&P500 average which is at 2.36.
Industry RankSector Rank
Dividend Yield 4.61%

5.2 History

On average, the dividend of IPG grows each year by 8.30%, which is quite nice.
IPG has paid a dividend for at least 10 years, which is a reliable track record.
IPG has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)8.3%
Div Incr Years12
Div Non Decr Years13

5.3 Sustainability

IPG pays out 60.83% of its income as dividend. This is not a sustainable payout ratio.
The dividend of IPG is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP60.83%
EPS Next 2Y-0.82%
EPS Next 3Y1.37%

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