We've Got a Winner

It's IPG.

Income 

Only three of the six stocks have a dividend: NLSN, JCDXF and IPG, and they all look quite good.  Over the past three years, each company has grown their dividend.

Let's look at the measures, the ranks and the final ranking in this category.  The measures are dividend yield, 3 year dividend per share CAGR and 1 year dividend per share growth.

	Dividend Yield	D/S 3 year CAGR	1 year D/S growth	Sum	Final Rank
JCDXF	2% 4	3% 4	8% 5	13	4
NLSN	6% 6	5% 5	5% 4	15	5
IPG	4% 5	12% 6	17% 6	17	6

IPG has some very nice dividend results.

Value

The value metrics are:

• price to book
• price to sales
• price to earnings (if the company has negative earnings they get a rank of zero)
• enterprise value to EBITDA.

	P/B	P/S	P/E	EV/EBITDA	Sum	Final Rank
TTD	.21 1	11.1 1	103 2	43 1	5	1
RAMP	.03 5	8.1 2	173 1	16 2	10	2
NLSN	.03 4	1.3 4	negative 0	9 5	13	3
JCDXF	.02 6	1.6 3	23 3	13 3	15	5
IPG	.04 3	.8 5	13 4	9 4	16	6
GRPN	.06 2	.7 6	negative 0	7 6	14	4

All of the companies in the group have what would generally be considered good P/B ratios except for TTD.  The same can be said for P/S but you have to exclude RAMP as well as TTD.  IPG PE ratio is good, JCDXF is acceptable and TTD and RAMP is very expensive.  From an EV/EBITDA perspective, GRPN, IPG and NLSN are attractive.  JCDXF is about average, RAMP is becoming more expensive and TTD is very expensive.

Taking it all together, IPG offers the best value.

Profitability

We'll look at six measures for the profitability factor:

• gross profit to assets
• net income margin
• 5 year average pre-tax return on assets
• 3 year average return on equity
• operating income margin
• free cash flow yield.

	GP/A	NM	5 YR Avg Pre-Tax ROA	3 Yr Ave ROE	OM	FCF	Sum	Rank
TTD	.32 4	.18 6	.08 6	.07 4	.22 6	.01 2	28	6
RAMP	.37 5	.03 3	.00 2	-.03 2	.04 2	.02 4	18	3
NLSN	.20 3	-.11 1	.03 3	.01 3	.17 5	.06 5	20	4
JCDXF	.15 2	.07 5	.04 4	.09 5	.08 3	-.01 1	20	4
IPG	.08 1	.07 4	.06 5	.28 6	.10 4	.01 3	23	5
GRPN	.76 6	.00 2	-.03 1	-.21 1	.02 1	.06 6	17	2

TTD had the best profitability results followed by IPG.

What I think

My instinct is to be more defensive given the declining momentum.  I'd like a healthy company with a good dividend and IPG fits the profile.  It's dividend is good.  It's profitability factors are appealing and its good value.  On the downside, its momentum is poor and its quality isn't standout.  However, I could live with those factors.

If You Just Want to Know The Highest Score

Here are the results in tabular form.

	Price Momentum	Quality	Growth	Income	Value	Profitability	Sum	Final Rank
TTD	6	4	6	0	1	6	23	5
RAMP	5	6	5	0	2	3	21	4
NLSN	1	1	1	5	3	4	15	1
JCDXF	2	3	2	4	5	4	20	3
IPG	3	2	4	6	6	5	26	6
GRPN	4	5	3	0	4	2	18	2

Look at that, IPG has the highest score.  I like it.  I'm going to watch how it does, maybe take a small position.

Factor-Based Analysis on Mid Cap Advertising/Marketing Firms, Part 2

Quality 

The quality factor uses five measures:

• Standard deviation of earnings - the lower the better,
• Gross margin - the higher the better,
• Net margin - the higher the better,
• Sales/assets - the higher the better,
• Financial leverage - the lower the better.

	SD	GM	NM	S/A	FL	Sum	Rank
TTD	.98 1	76% 6	18% 6	43% 1	0% 6	20	4
RAMP	.12 5	49% 5	3% 3	76% 5	23% 5	23	6
NLSN	.47 2	47% 3	-11% 1	43% 2	73% 1	9	1
JCDXF	.27 4	26% 2	7% 5	57% 3	36% 4	18	3
IPG	.32 3	12% 1	7% 4	62% 4	59% 2	14	2
GRPN	.11 6	48% 4	0% 2	161% 6	38% 3	21	5

Based on an equal ranking of the factors, RAMP comes out on top.  This is a factor that you personally might want to weight differently.  Perhaps you don't care about volatility in the stock price or you think a certain amount of debt is desirable.  You then might make other choices for the highest quality stock.

Growth

This factor looks at the year over year growth rate in revenue, EBITDA, free cash flow and gross income margin.

	Revenue	EBITDA	FCF	GM	Sum	Final Rank
TTD	55% 6	55% 6	215% 6	-3% 2	20	6
RAMP	30% 5	1% 3	0% 4	23% 6	18	5
NLSN	-1% 2	-10% 1	-20% 3	-3% 1	7	1
JCDXF	9% 3	6% 4	-32% 2	-2% 3	12	2
IPG	23% 4	7% 5	-47% 1	0% 4	14	4
GRPN	-7% 1	1% 2	76% 5	8% 5	13	3

TTD and RAMP are in the top positions.  I like TTD's results more - it's obviously higher than RAMP's but the individual components are also showing well, for the most part.

Tomorrow we'll cover income, value and profitability.

Factor Based Analysis, Mid Cap Adv/Mkt - Part 1

Ya, we're excited too.

Overview

This is a factor-based analysis looking at six mid-sized companies in the marketing and advertising space.  It will look at the relative strengths and weaknesses of the group members with the goal of finding a gem.

Peer Group:

Stock Name (Symbol)	Last Price (May 31, 2019)	Market Cap
Trade Desk, Inc. Class A(TTD:XNAS)	$198.81	8.8429B
LiveRamp Holdings, Inc.(RAMP:XNYS)	$51.38	3.4986B
Nielsen Holdings PLC(NLSN:XNYS)	$22.73	8.0804B
Jcdecaux SA(JCDXF:OOTC)	$27.80	5.9161B
Interpublic Group of Companies, Inc.(IPG:XNYS)	$21.22	8.1952B
Groupon, Inc. Class A(GRPN:XNAS)	$3.53	2.0050B

  Analysis Factors

This analysis will look at six factors:

• Price Momentum
• Quality
• Growth
• Income
• Value
• Profitability.

Price Momentum

This factor includes a long, medium and short-term measure.  Long term is the percentage price change over two years, medium is 12 month less one month price change and short-term is the price less three month moving average.  I'm going to look the market, the sector and then each stock in the group.

	Long	Medium	Short
Market	14%	9%	-4%
Sector (proxy S&P industrials)	5%	6%	-6%

The conclusion I draw from this is to proceed with caution, as momentum appears to slowing and possibly reversing.
Let's look at all the individual stocks next.  I'm looking at the same long and medium term momentum measures, the short term measure is the price change less the 10 week moving average.  The chart below shows the value each stock calculated for the measure and below that its relative ranking compared to the group.  The higher the number, the better its rank.

	Long	Medium	Short	Sum	Final Rank
TTD	261% 6	159% 6	-2% 5	17	6
RAMP	96% 5	99% 5	-8% 3	13	5
NLSN	-41% 1	-15% 2	-9% 2	5	1
JCDXF	-17% 2	3% 4	-10% 1	7	2
IPG	-15% 3	2% 3	-4% 4	10	3
GRPN	17% 4	-27% 1	0% 6	11	4

TTD had the best relative momentum score and definitely impressive results from an absolute perspective.  RAMP 's are good too.  Both are showing short term momentum weakness.

Tomorrow I'll review the quality and growth factors.