2014 Solid Organic Growth Predicted for Interpublic
Analysts strongly feel that Interpublic is ready to post solid organic growth for 2014, taking into account the advantages of H1’s accelerating macro climate. No one is surprised regarding Interpublic’s revenue year over year growth of 5 percent or their EPS of $02.5, figures that were on par with analysts’ estimates for Q2, based on strong operating leverage and organic growth.
Strong gross sales figures along with the cost reduction measures the company implemented since the previous year will finally turn into an increase in operating margin. The improvement operating metrics along with a reduction in interest costs and a share buyback will result in an annual EPS growth in the double digits for a minimum of five years. The benefits of winning accounts suggest better growth in the near future, which is why analysts feel Interpublic is well on its way to meeting estimates in terms of their top and bottom line figures for this year.
The company saw progress in practically all the regions they are operating this quarter, with an international organic revenue increase of 8 percent, thanks to organic growth of 16.4 percent in the U.K. and 7.4 percent increases in Latin America. The company’s revenues grew to $1.85 billion, which is 5.4 percent higher than the same quarter from the previous year, translating into organic growth of 4.7 percent. Organic growth in the U.S. declined slightly at 2.9 percent for this quarter, compared to 4.8 percent in Q1 and 3.3 percent year over year. Europe exhibited a decline in organic growth of 1.4 percent, which leads to negative organic revenue growth for the 11th consecutive quarter.
The competitiveness the company’s agencies have exhibited along with the quality of their offer in significant growing markets has led to high revenues. The company has gained a significant market share in marketing and digital service thanks to their successful and innovative approach to media offerings as well as positive trends for global ad networks that are focused on creating value.
In Q2, Interpublic bought back 3 million shares for a total value of $52.4 million. The company also posted a cash dividends of $39.9 million total, translating into $0.095 per share. Analysts have changed their Interpublic rating to “Buy” with a price target per share of $23. At the moment, analysts are estimating 2014’s EPS to be $1.01, 2015’s EPS at $1.2 and 2016’s EPS at $1.41 compared to the consensus, which is $1 for 2014, $1.2 for 2015 and $1.34 for 2016. However, analysts advise a wide safety margin before investors put their money in Interpublic.