Interpublic (IPG) to Report Q2 Earnings: What's in the Cards?
The Interpublic Group of Companies, Inc. IPG is scheduled to report second-quarter 2017 results before the opening bell on Jul 25. Notably, over the trailing four quarters, the company reported an average positive surprise of 43.59%, beating estimates thrice.
New York-based Interpublic is one of the world’s leading providers of marketing and advertising services. It forms an integral part of the communication industry and is highly competitive in nature. Headwinds in the currency market have left investors a little edgy about what the quarter holds for them.
Factors to Consider
Interpublic’s digital capabilities, diversified business model and geographic reach offer a distinctive competitive advantage. The company is expected to achieve targeted levels in the coming quarters based on diversification across emerging regions and collaboration and integration across agencies through technological improvement. Moreover, it continues to look for strategic investments and acquisitions to expand in high-growth regions and key world markets.
Moving ahead, the company plans to focus on de-leveraging and improving its balance sheet and reducing effective cost of debt. The Group’s best-in-industry talent and tools are expected to offer optimal and affordable solutions, thus providing an edge over its peers. The company’s efforts to reduce costs, improve margin, create stronger balance sheet and better capital structure aid in increasing returns and profitability.
During the quarter, the company announced that it had elevated five senior leaders into new roles to deliver more integrated client services across the firm's North America markets. This transformation in the company’s management will help it function more efficiently across North America. In turn, this will help the company augment its revenue turnover using the expertise of its management.
However, the company forms part of the communications industry, which is highly competitive in nature. Agencies and media services compete with other agencies and creative or media services providers to maintain existing client relationships and to win new clients. Also, keeping in view the service-oriented nature of the whole industry, it becomes imperative for the company to increase the count of talented employees as well as retain the existing ones. These are likely to pose challenges to the company’s prospects.
Earnings Whispers
Our proven model does not conclusively show that Interpublic will beat earnings this time. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.
Zacks ESP:Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the consensus estimate are both pegged at 34 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Interpublic Group of Companies, Inc. (The) Price and EPS Surprise
Interpublic Group of Companies, Inc. (The) Price and EPS Surprise | Interpublic Group of Companies, Inc. (The) Quote
Zacks Rank: Interpublic has a Zacks Rank #3. Although this increases the predictive power of ESP, we need a positive Earnings ESP in order to be confident about an earnings surprise.
Notably we caution against stocks with a Zacks Rank #4 and 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The CIT Group Inc. CIT has an Earnings ESP of + 10.53% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar Inc. CAT has an Earnings ESP of +4.92% and a Zacks Rank #2.
Avery Dennison Corporation AVY has an Earnings ESP of +1.68% and a Zacks Rank #2.
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