Are Investors Undervaluing Interpublic Group (IPG) Right Now?
Zacks Investment Research | Apr 10, 2019 09:10PM ET
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Interpublic Group (IPG) is a stock many investors are watching right now. IPG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. IPG has a P/S ratio of 0.86. This compares to its industry's average P/S of 0.98.
Finally, we should also recognize that IPG has a P/CF ratio of 9.24. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 12.73. IPG's P/CF has been as high as 12.34 and as low as 8.68, with a median of 11.01, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Interpublic Group is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, IPG feels like a great value stock at the moment.
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