Why The Interpublic Group of Companies, Inc. (NYSE:IPG) Could Be Worth Watching

Let's talk about the popular The Interpublic Group of Companies, Inc. (NYSE:IPG). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$33.40 at one point, and dropping to the lows of US$28.64. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Interpublic Group of Companies' current trading price of US$30.78 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Interpublic Group of Companies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Interpublic Group of Companies

What's The Opportunity In Interpublic Group of Companies?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 10.73x is currently trading slightly below its industry peers’ ratio of 12.69x, which means if you buy Interpublic Group of Companies today, you’d be paying a decent price for it. And if you believe that Interpublic Group of Companies should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Although, there may be an opportunity to buy in the future. This is because Interpublic Group of Companies’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Interpublic Group of Companies?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Interpublic Group of Companies, it is expected to deliver a relatively unexciting earnings growth of 0.2%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in IPG’s growth outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at IPG? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on IPG, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Interpublic Group of Companies as a business, it's important to be aware of any risks it's facing. For example, we've found that Interpublic Group of Companies has 2 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Interpublic Group of Companies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.