Interpublic Group Stock Rises After Digital Strategy Push Is the Valuation Now Justified?

If you’re on the fence about what to do with Interpublic Group of Companies stock, you’re not alone. Over the past few months, there has been a bit more action, and investors are starting to pay attention again. The share price has ticked up 4.5% in the last week, followed by a solid 5.6% gain over the past thirty days. While the one-year return is still in the red at -3.3%, long-term holders might be smiling with a five-year climb of 83.2%. This serves as a reminder that time in the market can sometimes win over timing it.

These moves have come as the advertising industry faces shifting economic winds and digital transformation, both of which matter a lot for Interpublic. In recent headlines, analysts highlighted the company’s expanding presence in digital advertising and recent strategic partnerships. This suggests leadership is actively adapting to changing market demands. Investors now seem to be warming up, possibly adjusting their view of risk as the company’s positioning looks stronger than before.

Let’s get to the heart of the matter: how should Interpublic be valued right now? Looking at six common valuation checks, the company scores a 3, meaning it’s undervalued in half of them. That’s an important clue, but there is much more to uncover. In the next section, we will dive into traditional valuation methods to see how Interpublic stacks up by the numbers. Later, I will share an approach that might give us an even clearer picture of the stock’s real worth.

Interpublic Group of Companies delivered -3.3% returns over the last year. See how this stacks up to the rest of the Media industry.

Approach 1: Interpublic Group of Companies Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the value of a company by projecting its expected future cash flows and discounting them back to today. This approach offers a clear view of what Interpublic Group’s future cash generation could be worth in present-day dollars.

For Interpublic Group, the current Free Cash Flow (FCF) sits at $806.9 Million. Analysts forecast steady growth, projecting FCF to reach $1.29 Billion by 2027. Looking further out, Simply Wall St extrapolates FCF to about $1.67 Billion in 2035, reflecting consistent growth in the business over the next decade.

After running these cash flows through a 2 Stage Free Cash Flow to Equity model, the estimated intrinsic value for Interpublic Group lands at $80.25 per share. Compared to the current share price, this DCF model signals an implied discount of 65.7 percent, suggesting the stock is deeply undervalued according to projected cash flows.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Interpublic Group of Companies.

Our Discounted Cash Flow (DCF) analysis suggests Interpublic Group of Companies is undervalued by 65.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Interpublic Group of Companies Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics for profitable companies like Interpublic Group. It gives investors a sense of how much they are paying for each dollar of earnings, making it particularly useful when the business generates steady profits.

Growth expectations and risks play a crucial role in determining what a "normal" or "fair" PE ratio should be. Higher expected earnings growth or lower risk typically justify a higher PE, while slower growth or more risk can push the fair multiple downward.

Interpublic Group currently trades at a PE ratio of 22.8x. For context, the Media industry average is 19.7x, and the average of its closest peers is even higher at 42.2x. On the surface, this suggests Interpublic’s valuation is modest compared to peers but slightly above the broader industry average.

To offer a more tailored benchmark, Simply Wall St calculates a "Fair Ratio" for Interpublic Group, which is 22.5x in this case. This proprietary measure adjusts for factors like market cap, profit margin, risk, and growth profile, making it more informative than raw industry or peer comparisons alone.

Since Interpublic’s actual PE is almost identical to its Fair Ratio, the stock looks fairly valued using this approach.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Interpublic Group of Companies Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, hands-on way for you to create or select a story—your perspective—about Interpublic Group of Companies and connect it directly to a set of financial assumptions and a fair value estimate. Narratives make investing more accessible by letting you link what you believe about the company, such as their future earnings growth and margin potential, to concrete numbers and an up-to-date fair value.

This approach is available on Simply Wall St’s Community page, where millions of investors use Narratives to compare their views, test ideas, and track changes as news or earnings reports are released. This keeps your outlook dynamic, not static. Narratives are most powerful because they join the company’s story with its financial forecasts, so you can quickly decide if the gap between Fair Value and the current Price signals a buy or sell opportunity.

For example, some Interpublic Narratives are very bullish, expecting over $1.2 billion in 2028 earnings and a fair value of $39 per share, while others take a more cautious view, projecting $923 million in 2028 earnings and a fair value closer to $25.60. This demonstrates how perspectives and stories really matter to your investment decisions.

Do you think there's more to the story for Interpublic Group of Companies? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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