Interpublic Group of Companies, Inc. (The) (NYSE: IPG) and ReachLocal (NASDAQ:RLOC) are both business services companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitabiliy, risk and dividends.

Analyst Recommendations

This is a summary of current recommendations and price targets for Interpublic Group of Companies, Inc. (The) and ReachLocal, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Interpublic Group of Companies, Inc. (The) 1 4 9 0 2.57
ReachLocal 0 0 0 0 N/A

Interpublic Group of Companies, Inc. (The) presently has a consensus price target of $26.92, suggesting a potential upside of 9.02%. Given Interpublic Group of Companies, Inc. (The)’s higher possible upside, analysts clearly believe Interpublic Group of Companies, Inc. (The) is more favorable than ReachLocal.

Institutional and Insider Ownership

97.8% of Interpublic Group of Companies, Inc. (The) shares are held by institutional investors. 1.5% of Interpublic Group of Companies, Inc. (The) shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Interpublic Group of Companies, Inc. (The) has a beta of 1.56, indicating that its stock price is 56% more volatile than the S&P 500. Comparatively, ReachLocal has a beta of -0.18, indicating that its stock price is 118% less volatile than the S&P 500.

Dividends

Interpublic Group of Companies, Inc. (The) pays an annual dividend of $0.72 per share and has a dividend yield of 2.9%. ReachLocal does not pay a dividend. Interpublic Group of Companies, Inc. (The) pays out 47.1% of its earnings in the form of a dividend. ReachLocal has increased its dividend for 4 consecutive years.

Valuation and Earnings

This table compares Interpublic Group of Companies, Inc. (The) and ReachLocal’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Interpublic Group of Companies, Inc. (The) $7.86 billion 1.24 $1.11 billion $1.53 16.14
ReachLocal N/A N/A N/A ($1.66) -2.77

Interpublic Group of Companies, Inc. (The) has higher revenue and earnings than ReachLocal. ReachLocal is trading at a lower price-to-earnings ratio than Interpublic Group of Companies, Inc. (The), indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Interpublic Group of Companies, Inc. (The) and ReachLocal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Interpublic Group of Companies, Inc. (The) 7.95% 29.00% 4.90%
ReachLocal -5.20% N/A -15.27%

Summary

Interpublic Group of Companies, Inc. (The) beats ReachLocal on 11 of the 13 factors compared between the two stocks.

Interpublic Group of Companies, Inc. (The) Company Profile

The Interpublic Group of Companies, Inc. is a global advertising and marketing services company. The Company specializes in consumer advertising, digital marketing, communications planning and media buying, public relations and specialized communications disciplines. It operates in two segments: Integrated Agency Networks (IAN) and Constituency Management Group (CMG). Its agencies offer customized marketing programs for clients that range in scale from global marketers to regional and local clients. IAN consists of McCann Worldgroup, FCB, MullenLowe Group, IPG Mediabrands, its digital specialist agencies and its domestic integrated agencies. CMG consists of its specialist marketing services offerings. It has three global networks: McCann Worldgroup, Foote, Cone & Belding and MullenLowe Group, which provide integrated, advertising and marketing solutions for clients. Its global media services companies include UM and Initiative, which operate under the IPG Mediabrands umbrella.

ReachLocal Company Profile

ReachLocal, Inc. (ReachLocal) offers a range of online marketing and reporting solutions. The Company’s digital marketing solution consists of products and solutions in three categories: digital advertising (including ReachSearch, ReachDisplay, ReachDisplay InApp and ReachRetargeting); Web presence (including ReachSite+ReachEdge, ReachSEO, ReachCast, ReachListings and TotalLiveChat), and software (ReachEdge and Kickserv). It focuses on small to medium-sized businesses (SMBs). The Company delivers its suite of products and solutions to local businesses through a combination of its technology platform, its direct inside and outside sales force, and select third-party agencies and resellers. It also focuses on certain core verticals, which include home services, professional services, specialty services and healthcare. It also provides solutions to multi-location advertisers, such as franchises and other businesses that have multiple locations across a number of cities and states.

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