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Will Interpublic Group (IPG) Surprise This Earnings Season?

Zacks Equity Research

The Interpublic Group of Companies, Inc (IPG) is scheduled to report second-quarter 2014 results before the opening bell on Jul 18. In the last reported quarter, the reported loss of the company was narrower than the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.

Factors to Consider

Jack Morton Worldwide - the leading brand experience agency of Interpublic Group is expanding its business in Germany, South Korea and building a new affiliation with Brazil-based agency, Mark Up. With continuous expansion plans and strategic tie-ups, Interpublic Group expects to strengthen its position with respect to new business activities as well as opportunities from existing and new clients. Also Jack Morton Worldwide acquired Genuine Interactive - leading digital, mobile and social firm in Boston, which is expected to effortlessly connect clients with consumers. This acquisition is likely to boost Jack Morton Worldwide’s digital offerings.

Additionally, Weber Shandwick, the public relations (:PR) unit of Interpublic Group, acquired Swedish creative PR agency Prime and its business intelligence division United Minds. This acquisition will help Interpublic Group to expand its footprint in the Nordics and allow it to exploit Prime’s award-winning creative talent. This transaction is expected to drive innovation and improve client service.

The company’s efforts in reducing costs, continuous margin improvement, stronger balance sheet and better capital structure will further enable it to likely post favorable results this quarter.

Earnings Whispers

Our proven model shows that Interpublic Group is likely to beat earnings since it has the appropriate combination of two key ingredients:

Earnings ESP: Expected Surprise Prediction or ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +4.00%. This indicates a likely earnings beat.

Zacks Rank #3 (Hold): Stocks with a Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and #5) should never be considered while going into an earnings announcement.

Interpublic Group’s Zacks Rank #3 increases the predictive power of its ESP. The combination of its Zacks Rank and Earnings ESP make us confident of a positive earnings surprise in the soon-to-be reported quarter.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat in the future.

Arch Capital Group Ltd. (ACGL), with an Earnings ESP of +6.12% and a Zacks Rank #2 (Buy).

ConocoPhillips (COP), with an Earnings ESP of +6.96% and a Zacks Rank #1.

Clayton Williams Energy, Inc. (CWEI), with an Earnings ESP of +4.97% and a Zacks Rank #1.

Read the Full Research Report on COP
Read the Full Research Report on IPG
Read the Full Research Report on CWEI
Read the Full Research Report on ACGL

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