Interpublic Group of Companies Inc. (IPG) reported earnings of 22 cents per diluted share for the second quarter, up from 19 cents in the second quarter of 2011. The result surpassed the Zacks Consensus Estimate by a penny.
Revenue: Revenue inched lower year over year to $1715.7 million from $1740.7 million in 2Q11, with a 3.7% sales decline in the U.S. However, a 1.6% growth was registered internationally. Revenue in the quarter missed the Zacks Consensus Estimate of $1,760 million.
Organic revenue increased 0.8% during the quarter, which was based on high growth in international markets, marketing services and digital capabilities.
Margin: Operating income was recorded at $176.4 million, compared with $174 million in the year-ago period. Operating expenses in the quarter inched up 1.7% to $1,539.3 million. This included an increase of 0.6% in salaries and related expenses and 4.4% in office and general expenses. Operating margin in the quarter was 10.3%, compared with 10% in the year-ago quarter.
Balance Sheet: Exiting the second quarter, the company’s cash and cash equivalents and marketable securities amounted to $1.51 billion, compared with $1.59 billion in the previous quarter. Total debt was recorded at $1.63 billion, compared with $1.62 billion in the preceding quarter.
Share Repurchase Program/ Dividend: During the second quarter of 2012, the company repurchased 6.0 million shares at an aggregate cost of $65.6 million and an average price of $10.92 per share. The company also declared and paid a common stock cash dividend of $0.06 per share, for a total of $26.1 million.
The company is the third largest advertising company in the world, offering a range of advertising and marketing communication services. The company competes with other industry players, such as Omnicom Group Inc. (OMC), Publicis Groupe SA (PUBGY) and WPP plc (WPPGY).
We currently maintain a long-term Neutral recommendation on the stock. The company holds a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.
INTERPUBLIC GRP (IPG): Free Stock Analysis Report
OMNICOM GRP (OMC): Free Stock Analysis Report
PUBLICIS GP-ADR (PUBGY): Free Stock Analysis Report
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