IHS Markit (NYSE:INFO) and The Interpublic Group of Companies (NYSE:IPG) are both large-cap business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.
Profitability
This table compares IHS Markit and The Interpublic Group of Companies' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| IHS Markit | 20.31% | 11.03% | 5.71% |
| The Interpublic Group of Companies | 6.03% | 25.71% | 4.20% |
Earnings & Valuation
This table compares IHS Markit and The Interpublic Group of Companies' gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| IHS Markit | $4.29 billion | 10.37 | $502.70 million | $2.32 | 45.24 |
| The Interpublic Group of Companies | $10.22 billion | 1.25 | $656 million | $1.93 | 16.85 |
The Interpublic Group of Companies has higher revenue and earnings than IHS Markit. The Interpublic Group of Companies is trading at a lower price-to-earnings ratio than IHS Markit, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
93.8% of IHS Markit shares are owned by institutional investors. Comparatively, 97.0% of The Interpublic Group of Companies shares are owned by institutional investors. 0.8% of IHS Markit shares are owned by insiders. Comparatively, 1.1% of The Interpublic Group of Companies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Volatility & Risk
IHS Markit has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500. Comparatively, The Interpublic Group of Companies has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500.
Dividends
IHS Markit pays an annual dividend of $0.80 per share and has a dividend yield of 0.8%. The Interpublic Group of Companies pays an annual dividend of $1.08 per share and has a dividend yield of 3.3%. IHS Markit pays out 34.5% of its earnings in the form of a dividend. The Interpublic Group of Companies pays out 56.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Interpublic Group of Companies has raised its dividend for 1 consecutive years. The Interpublic Group of Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a summary of recent ratings and price targets for IHS Markit and The Interpublic Group of Companies, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| IHS Markit | 0 | 5 | 11 | 0 | 2.69 |
| The Interpublic Group of Companies | 0 | 3 | 4 | 0 | 2.57 |
IHS Markit presently has a consensus target price of $88.5714, suggesting a potential downside of 15.61%. The Interpublic Group of Companies has a consensus target price of $29.00, suggesting a potential downside of 10.82%. Given The Interpublic Group of Companies' higher possible upside, analysts clearly believe The Interpublic Group of Companies is more favorable than IHS Markit.
Summary
IHS Markit beats The Interpublic Group of Companies on 9 of the 17 factors compared between the two stocks.
