Stock of the week: WPP
In its most recent results, advertising company WPP reported a record set of results with a 17.6% increase in revenue to £14.2bn, which resulted in a 21% rise in net profit of £1.4bn. Furthermore, the dividend was raised to 56.6 pence. Investors should note that the group forecast a slower rate in net sales growth of 2% for the year ahead, which led to a sharp fall in the share price.
WPP is the bellwether of the advertising industry and as such is widely regarded as a global economic barometer. It offers a wide range of exposure to both digital media and global markets. Interested investors should note that there has been a steady progress in emerging markets, with around 30% of revenues now coming from these countries. Also, new technology continues to open up opportunities for growth for the firm over the longer term, which is evident as new media related business is WPP’s fastest growing area.
The shares have performed well over recent years and we are happy to continue to recommend this company as a ‘buy’ to long-term investors. The growing importance of emerging markets and digital media to the company looks set to continue, allied to improving dividends, earnings momentum and a steady flow of acquisitions.