Is Now The Time To Look At Buying The Interpublic Group of Companies, Inc. (NYSE:IPG)?

The Interpublic Group of Companies, Inc. (NYSE:IPG) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$39.44 at one point, and dropping to the lows of US$32.20. 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$32.75 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.

Check out our latest analysis for Interpublic Group of Companies

Is Interpublic Group of Companies still cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’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 12.63x is currently trading slightly below its industry peers’ ratio of 17.07x, 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. In addition to this, it seems like Interpublic Group of Companies’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Interpublic Group of Companies generate?

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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -3.3% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Interpublic Group of Companies. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? IPG seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on IPG, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on IPG for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystallize your views on IPG should the price fluctuate below the industry PE ratio.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 1 warning sign for Interpublic Group of Companies you should know about.

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.