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Omnicom (OMC) Up 11.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Omnicom (OMC - Free Report) . Shares have added about 11.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Omnicom due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Omnicom Q3 Earnings and Revenues Beat Estimates
Omnicom reported impressive third-quarter 2022 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Earnings of $1.77 per share beat the consensus mark by 7.9% and increased 7.3% year over year, driven by a strong margin performance.
Total revenues of $3.4 billion surpassed the consensus estimate by 3% and increased slightly year over year. The increase in the top line resulted from an increase of 7.5% in revenues from organic growth, partially offset by a negative impact of 6.3% due to foreign currency translations and a 1% fall in acquisition revenues and net disposition revenues.
Strong Organic Growth Across all Disciplines and Regions
Across fundamental disciplines, revenues from Advertising & Media were up 5.9%, Precision marketing revenues jumped 16.3%, Execution & Support revenues increased 3.9% and Commerce and Brand Consulting revenues were up 11.1%. Experiential revenues improved 2.3%, Public Relations revenues augmented 12.6%, and Healthcare revenues increased 5%, organically, year over year.
Across regional markets, year-over-year organic revenue growth was 7.6% in the United States, 11.5% in the United Kingdom, 7.7% in Other North America, 6% in the Euro Markets & Other Europe, 13.1% in Latin America and 12.2% in the Middle East and Africa. Asia Pacific was up 4.4% year over year.
Margins Increase Year Over Year
EBITA in the quarter came in at $566.1 million, up 1% year over year. EBITA margin was 16.4%, up 10 basis points (bps) year over year. Operating profit of $546 million increased nearly 1% year over year. The operating margin increased 10 bps to 15.9%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Omnicom has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Omnicom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Omnicom (OMC) Up 11.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Omnicom (OMC - Free Report) . Shares have added about 11.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Omnicom due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Omnicom Q3 Earnings and Revenues Beat Estimates
Omnicom reported impressive third-quarter 2022 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Earnings of $1.77 per share beat the consensus mark by 7.9% and increased 7.3% year over year, driven by a strong margin performance.
Total revenues of $3.4 billion surpassed the consensus estimate by 3% and increased slightly year over year. The increase in the top line resulted from an increase of 7.5% in revenues from organic growth, partially offset by a negative impact of 6.3% due to foreign currency translations and a 1% fall in acquisition revenues and net disposition revenues.
Strong Organic Growth Across all Disciplines and Regions
Across fundamental disciplines, revenues from Advertising & Media were up 5.9%, Precision marketing revenues jumped 16.3%, Execution & Support revenues increased 3.9% and Commerce and Brand Consulting revenues were up 11.1%. Experiential revenues improved 2.3%, Public Relations revenues augmented 12.6%, and Healthcare revenues increased 5%, organically, year over year.
Across regional markets, year-over-year organic revenue growth was 7.6% in the United States, 11.5% in the United Kingdom, 7.7% in Other North America, 6% in the Euro Markets & Other Europe, 13.1% in Latin America and 12.2% in the Middle East and Africa. Asia Pacific was up 4.4% year over year.
Margins Increase Year Over Year
EBITA in the quarter came in at $566.1 million, up 1% year over year. EBITA margin was 16.4%, up 10 basis points (bps) year over year. Operating profit of $546 million increased nearly 1% year over year. The operating margin increased 10 bps to 15.9%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Omnicom has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Omnicom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.