INTERPUBLIC GROUP OF COMPANIES, INC. (IPG) Stock Analysis
INTERPUBLIC GROUP OF COMPANIES, INC. (IPG) Stock Analysis
Overall Grade: F (Concerning)
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INTERPUBLIC GROUP OF COMPANIES, INC. faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 12.0% | Near cost of capital |
| FCF Margin | 8.1% | Healthy cash flow |
| Debt/Equity | 0.8x | Moderate leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is INTERPUBLIC GROUP OF COMPANIES, INC.'s Profitability and ROIC?
INTERPUBLIC GROUP OF COMPANIES, INC.'s return on invested capital of 12.0% is around industry norms. Gross margin of 100.0% with operating margin at 8.7% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 12.0% | Adequate | Adequate returns |
| Return on Equity (ROE) | 11.9% | Adequate | Moderate equity returns |
| Gross Margin | 100.0% | Excellent | Strong pricing power |
| Operating Margin | 8.7% | Adequate | Moderate operational efficiency |
How Strong is INTERPUBLIC GROUP OF COMPANIES, INC.'s Cash Flow Quality?
INTERPUBLIC GROUP OF COMPANIES, INC. generated $839.7M in free cash flow over the trailing twelve months, representing a 8.1% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 2.2x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 8.1% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $839.7M | Good | Positive cash generation |
| OCF/Net Income | 2.2x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is INTERPUBLIC GROUP OF COMPANIES, INC.'s Financial Health?
INTERPUBLIC GROUP OF COMPANIES, INC.'s debt-to-equity ratio of 0.8x indicates moderate leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.8x | Adequate | Moderate leverage |
| Net Cash Position | $-1.3B | Warning | Net debt position |
Is INTERPUBLIC GROUP OF COMPANIES, INC. Stock Overvalued or Undervalued?
INTERPUBLIC GROUP OF COMPANIES, INC. trades at a P/E of 20.7x, representing a premium to the sector median of N/A.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 20.7x | Adequate | Premium valuation |
| EV/Sales | 0.4x | Excellent | Attractive revenue multiple |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 12.0% | Top 50% | 1.8x above |
| Free Cash Flow Margin | 8.1% | Bottom 50% | 0.8x below |
| Gross Margin | 100.0% | Top 10% | 1.9x above |
| Operating Margin | 8.7% | Top 50% | 1.4x above |
| Return on Equity (ROE) | 11.9% | Top 50% | 1.9x above |
| P/E Ratio | 20.7x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 12.0% (Adequate - Top 50% of sector (median: 6.5%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 8.1% (Adequate - Bottom 50% of sector (median: 10.0%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 100.0% (Excellent - Top 10% of sector (median: 52.9%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 78.7% (Adequate)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 20.7x (Adequate)
Frequently Asked Questions
Q: What is INTERPUBLIC GROUP OF COMPANIES, INC.'s Return on Invested Capital (ROIC)?
INTERPUBLIC GROUP OF COMPANIES, INC. (IPG) has a trailing twelve-month Return on Invested Capital (ROIC) of 12.0%. This compares above the sector median of 6.5%. An ROIC near 8-12% is approximately the cost of capital for most companies.
Q: What is INTERPUBLIC GROUP OF COMPANIES, INC.'s Free Cash Flow Margin?
INTERPUBLIC GROUP OF COMPANIES, INC. (IPG) has a free cash flow margin of 8.1%, generating $839.7 million in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is INTERPUBLIC GROUP OF COMPANIES, INC. stock overvalued or undervalued?
INTERPUBLIC GROUP OF COMPANIES, INC. (IPG) trades at a P/E ratio of 20.7x, which is above the sector median of N/A. The EV/Sales multiple is 0.4x.
Q: How much debt does INTERPUBLIC GROUP OF COMPANIES, INC. have?
INTERPUBLIC GROUP OF COMPANIES, INC. (IPG) has a debt-to-equity ratio of 0.8x with total debt of $2.9 billion. Net debt position is $1.3 billion.
Q: How does INTERPUBLIC GROUP OF COMPANIES, INC. compare to competitors in Technology?
Compared to other companies in Technology, INTERPUBLIC GROUP OF COMPANIES, INC. (IPG) shows: ROIC of 12.0% is above the sector median of 6.5% (Top 37%). FCF margin of 8.1% trails the sector median of 10.0% (Bottom 45% of sector). Gross margin at 100.0% is 47.1 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with INTERPUBLIC GROUP OF COMPANIES, INC.?
INTERPUBLIC GROUP OF COMPANIES, INC. (IPG) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-11-10. TTM metrics as of Q2 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.