November 14, 2011 - The Interpublic Group of Companies, Inc. (IPG-NYSE), through its subsidiaries, provides advertising and marketing services worldwide. It offers various services across marketing disciplines, including consumer advertising, digital marketing, media buying and planning, public relations, events marketing, search engine marketing, e-commerce solutions, and specialized communications disciplines.

Its global brands include McCann, Draftfcb, and Lowe; and full-service agency brands comprise Campbell-Ewald, Campbell Mithun, Hill Holliday, The Martin Agency, Mullen, and Gotham. The company was formerly known as McCann-Erickson Incorporated and changed its name to The Interpublic Group of Companies, Inc. in January 1961. The Interpublic Group of Companies, Inc. was founded in 1902 and is based in New York, New York.

One thing that companies will spend money on when they feel more sure of an economic rebound is advertising. While they cut back or cut off dollars to advertise during rough times, that doesn't last once consumers start opening their wallets. Companies want to grab consumers' attention and direct them to their goods and services. IPG is there to help.

Third quarter results suggest evidence that these elements have already begun. Organic sales growth showed impressive improvement, up 8.7% compared to the same period last year. Latin America saw revenues increase by 21% and Asia/Pacific reported 15% higher numbers. U.S. sales were ahead by 10%. Most industries participated, led by retail, financial services, and healthcare.

On the negative side, Europe didn't do as well as last year. But with most other regions moving ahead, total numbers improved. Like operating margins since all employees only saw a 2.6% increase above the same number last year at this time. To help boost earnings per share, there were fewer shares outstanding as the company continued its stock repurchase program. At the conference call for the third quarter, management stated clients weren't holding back for their fourth quarter ad spending. Look for the U.S., Latin America and Asia/Pacific to continue their solid growth with Europe lagging in the last quarter.

Actual earnings for the quarter were 16 cents a share, 60% ahead of analysts' expectation of 10 cents. For the full year, 17 analysts have a consensus estimate of 65 cents compared to last year's 47 cents, an improvement of 38.3%. Next year, they expect 75 cents.

Interpublic lost a huge client recently: S.C. Johnson (the family company....their ads are almost everywhere every night....they make household fragrances and cleaners among other things). It represented 1% of total revenues for IPG. That's the bad news. The good news is that IPG can now focus on other household product companies, ones that are larger and have an international presence.

The Japanese auto manufacturers curtailed their ad spending after the earthquake/tsunami tragedy. They're starting to rev up again since parts are now being produced and delivered. Expect them to resume heavy advertising over the holidays and when new models are introduced.

The company is working on increasing its operating margins. One way is to increase sales faster than overhead. Some of that is already occurring. Operating margin reached a record 9.1% for the last 12 months. Management wants to get it to 13%.

A dividend started for the first time this year. It's 24 cents annually. That's one way the company is rewarding shareholders. The other is its strong stock repurchase program. In 2011, it bought $269 million worth, and there's $181 million left in the currently authorized allotment.

Essential Numbers:

- Forward P/E:12.8
- Price to book: 2
- Profit margin: 6.72%
- Operating margin: 9.1%
- Return on equity: 18.82%
- Return on assets: 3.34%
- Total cash: $1.8 billion
- Total cash per share: $3.90
- Total debt: $1.72 billion
- Current ratio: 1.02
- Book value per share: $4.68
- Beta: 1.85
- 52 week change: 2.16%
- Shares Outstanding: 461.17 million
- Float: 457.51 million
- Held by insiders: .73%
- Held by institutions: 94.2%

IPG should appeal to investors bullish on the global economy. Since the company is well represeneted around the world, regions like Latin America and Asia/Pacific, ones that are showing exceptional growth now, will compensate for any slowness in Europe. When there's a general world wide economic recovery, IPG will have all pistons pumping, and profits should jump accordingly.

- Company Web site: www.interpublic.com

   Ted Allrich