When close to half the companies in the United States have price-to-earnings ratios (or "P/E's") above 17x, you may consider The Interpublic Group of Companies, Inc. (NYSE:IPG) as an attractive investment with its 13.4x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.
Interpublic Group of Companies has been struggling lately as its earnings have declined faster than most other companies. The P/E is probably low because investors think this poor earnings performance isn't going to improve at all. If you still like the company, you'd want its earnings trajectory to turn around before making any decisions. Or at the very least, you'd be hoping the earnings slide doesn't get any worse if your plan is to pick up some stock while it's out of favour.
Check out our latest analysis for Interpublic Group of Companies
NYSE:IPG Price to Earnings Ratio vs Industry December 19th 2023 Keen to find out how analysts think Interpublic Group of Companies' future stacks up against the industry? In that case, our free report is a great place to start.
Does Growth Match The Low P/E?
Interpublic Group of Companies' P/E ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the market.
If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 4.9%. However, a few very strong years before that means that it was still able to grow EPS by an impressive 67% in total over the last three years. Accordingly, while they would have preferred to keep the run going, shareholders would probably welcome the medium-term rates of earnings growth.
Looking ahead now, EPS is anticipated to climb by 7.2% each year during the coming three years according to the eight analysts following the company. With the market predicted to deliver 12% growth per annum, the company is positioned for a weaker earnings result.
With this information, we can see why Interpublic Group of Companies is trading at a P/E lower than the market. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.
The Final Word
Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.
We've established that Interpublic Group of Companies maintains its low P/E on the weakness of its forecast growth being lower than the wider market, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
Don't forget that there may be other risks. For instance, we've identified 1 warning sign for Interpublic Group of Companies that you should be aware of.
If these risks are making you reconsider your opinion on Interpublic Group of Companies, explore our interactive list of high quality stocks to get an idea of what else is out there.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. 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.
当美国将近一半的公司的市盈率(或 “市盈率”)超过17倍时,您可以将Interpublic Group of Companies, Inc.(纽约证券交易所代码:IPG)视为具有吸引力的投资,其市盈率为13.4倍。尽管如此,我们需要更深入地研究以确定降低市盈率是否有合理的基础。
Interpublic Group of Companies最近一直处于困境,因为其收益下降速度快于大多数其他公司。市盈率可能很低,因为投资者认为这种糟糕的收益表现根本不会改善。如果你仍然喜欢这家公司,你希望在做出任何决定之前扭转其盈利轨迹。或者至少,如果你计划在失宠的时候买入一些股票,你希望收益下滑不会变得更糟。
查看我们对Interpublic Group of Companies的最新分析
纽约证券交易所:IPG 市盈率与行业对比 2023 年 12 月 19 日 想了解分析师如何看待Interpublic Group of Companies的未来与行业背道而驰?在这种情况下,我们的免费报告是一个不错的起点。
增长与低市盈率相匹配吗?
Interpublic Group of Companies的市盈率对于一家预计增长有限且重要的是表现比市场差的公司来说是典型的。