On July 28, The Interpublic Group of Companies Inc. (IPG) reported its financial results for the second quarter of 2011 with net results improving over the year-ago quarter. The diluted earnings per share were 19 cents in the reported quarter compared with 15 cents per share a year ago. The recorded EPS marginally beat the Zacks Consensus Estimate by a penny.
Revenue
Revenue in the second quarter escalated 8.0% year over year to $1,740.7 million, marginally below the Zacks Consensus Estimate of $1,753 million.
Organic growth in the quarter was 4.7%, with roughly 4.2% growth in the U.S. and 5.5% internationally. The organic growth is attributable to revenue increase across all geographic regions as well as major global networks.
Margin
Operating income was $174.0 million, down by 1.8% year over year. Operating expenses in the quarter grew 9.2% to $1.6 billion due to an increase of 10.6% in salaries and related expenses and a rise of 6.3% in office and general expenses. Operating margin in the quarter was 10.0% compared with 11.0% in the year-ago quarter.
Balance Sheet
Exiting the second quarter, the company’s cash and cash equivalents and marketable securities decreased marginally to $1.82 billion from $1.85 billion in the previous quarter. Total debt increased to $1.77 billion versus $1.73 billion in the sequentially preceding quarter.
Dividend/Share Repurchase
During the quarter, the company paid dividends amounting to $28.3 million and repurchased 12.0 million shares at an average price of $11.61 per share.
Outlook
Management maintains organic revenue growth target of 4%-5% and operating margin target of 9.5% for fiscal 2011.
New York based, Interpublic Group of Companies Inc. together with its subsidiaries, provides advertising and marketing services worldwide. The company directly competes with its peers, such as Omnicom Group Inc. (OMC), Publicis Groupe SA (PUBGY.PK) and WPP plc (WPPGY).
We currently maintain a long-term Neutral recommendation on the stock. Interpublic Group has a Zacks #3 Rank, which translates into a short-term Hold rating (1-3 months).
INTERPUBLIC GRP (IPG): Free Stock Analysis Report
OMNICOM GRP (OMC): Free Stock Analysis Report
WPP GRP PLC (WPPGY): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment