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Why You Should Hold on to Omnicom (OMC) Stock Right Now

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Omnicom Group Inc.’s (OMC - Free Report) shares have outperformed the Zacks categorized Advertising and Marketing industry over the last two months with  an average decline of 3%, narrower than the average loss of 5.2% for the latter. The company’s earnings estimates for the same period have seen a positive revision of 1.1%. Omnicom has an average positive earnings surprise of 2.31% for the trailing four quarters, beating estimates on every occasion.

Omnicom has a VGM Score of ‘A’. Per the valuation metrics, the company may be undervalued compared to its peers at the moment. It has a strong score of ‘A’ on both value and growth front.

Over the last 12-month period, the return on equity increased 42.39% compared with just 8.29% gain of the industry. We expect the company to witness higher revenues in the imminent future on the back of prudent acquisitions and organic growth.

Omnicom is experiencing continuous revenue growth, driven by healthy performance in developed markets like the U.S. and developing markets like Asia. The measures undertaken by the company to reduce costs have also helped it boost earnings. It is expanding its global footprint and is moving into new service areas. It is also building upon its digital and analytical capabilities by investing in agencies and partnering with innovative technology companies in key markets. Omnicom’s operations are diversified across technology platforms, thus lowering its dependence on any one product in these dynamic technological markets. All these initiatives augur well for the long-term growth and stability of the company.

In addition, the company also reported modest fourth-quarter 2016 results, with a track record of strengthening its business and expanding its global client base through acquisition of complementary companies. We remain encouraged by the healthy quarterly results of the company and its acquisition spree.

Bottom Line

Omnicom currently carries a Zacks Rank #3 (Hold). We believe that investors should hold on to the stock and wait for broader factors to improve as its growth prospects make it a compelling pick.

Stocks to Consider

Some better-ranked stocks in the industry include CBIZ, Inc. (CBZ - Free Report) , CRA International, Inc. (CRAI - Free Report) and The Hackett Group, Inc. (HCKT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CBIZ has beaten earnings estimates twice in the trailing four quarters for a positive surprise of 21.45%.

CRA International has a long-term earnings growth expectation of 8%.

The Hackett Group has a long-term earnings growth expectation of 17.3%.

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