WPP LON:WPP, the communications, advertising, public relation company was the focus of an article we published last month.
In the article Rob Stephens, The Armchair Trader’s columnist asked: ‘Where next for WPP’s share price as world economic outlook deteriorates?’ and highlighted the decline in WPP’s share price this year, warning it could come under further pressure.
However, he noted that WPP’s shares include a wide margin of safety following their decline. It was currently trading on a forward price-to-earnings ratio of around 8x, suggesting investors had at least partly factored in potential difficulties for the firm as a weaker global growth rate leads to a likely moderation in advertising, branding and ecommerce spend.
Today (26th October) WPP published its 3Q22 results, reporting a 10.3% surge in growth, including like-for-like revenue growth of 2.7%. In its top five markets, WPP saw positive revenue growth in the US, UK and India, but revenue fell in China and Germany. It also noted that revenue grew by 19.7% in Brazil and 7.7% in Canada.
In 3Q22 the company secured USD1.7bn (GBP1.5bn) of new business, bringing its revenue for year-to-date up to USD5.1bn. Feeling more secure, and presumably to insulate its share price, WPP completed GBP692m of share buy-backs of a GBP800m 2022 target.
WPP upgrades guidance
Feeling more confident as the year moved to a close, the company has upgraded its guidance, predicting a growth in revenue for the year (less pass-through costs) of 6.5% to 7% up from its previous prediction of 6% to 7%. It also issued guidance on its headline operating margin pushing it up 30bps to 50bps.
Mark Read, chief executive officer said in a statement this morning: “Our growth over the year has been strong with full year like-for-like revenue less pass-through costs now upgraded to 6.5% to 7.0%. We have continued to invest in our people and in data and technology to support this growth, resulting in headline operating margin now expected to be up 30 to 50 bps. We are on track with the GBP300m transformation savings and will continue to manage our costs with discipline.”WPP opened trading at 769.6p this morning and had declined to 745.2p within the first hour of trading. This year to date WPP has offered a -33.5% return, with a one-year return of -21%. Its shares have ranged between 713p and 1,231.5p over a 52-week period and it has a market capitalization of GBP8.35bn. Since 21st September, WPP’s shares have declined 2%.
The wait continues…
