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Advertising & Marketing Outlook Dull Amid Coronavirus Mayhem
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The companies grouped under the Zacks Advertising and Marketing industry offer a range of services, including advertising, branding, content marketing, digital/direct marketing, digital transformation, financial/corporate business-to-business advertising, graphic arts/digital imaging, healthcare marketing and communications, and in-store design services.
Prominent players from the industry include The Interpublic Group of Companies (IPG - Free Report) and Omnicom (OMC - Free Report) .
Here are the industry’s three major themes:
The industry’s revenue, income and cash flow have declined significantly over the past three months due to the pandemic-led cancellations of social events such as sports, business conferences and concerts.
The pandemic has resulted in an economic slowdown and there has been a significant drop in advertising spending across the world. Consequently, demand for marketing and advertising services has taken a hit.
Amid the crisis, digital media consumption has shot up, with consumers spending more time indoors on various media platforms and streaming video services. Thus, agencies offering digital marketing services stand to gain, as these firms are better positioned to address this rapid change in customer preference. According to Magna’s most recent global ad forecast, U.S. digital ad spend is anticipated to be up 2% this year.
Zacks Industry Rank Indicates Gloomy Prospects
The Zacks Advertising And Marketingindustry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #229. This rank places it in the bottom 9% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been steadily pushing their estimates south. Over the past year, the industry’s consensus earnings estimate for 2020 has moved 65.8% south.
Despite the gloomy prospects, we present a few stocks that you may want to consider for your portfolio. But before that it’s worth taking a look at the industry’s performance and current valuation.
Industry Lags the S&P 500 & Sector
Over the past year, the Zacks Advertising And Marketing industry has underperformed the S&P 500 composite and the broader sector.
While the industry has depreciated 40%, the broader sector and the S&P 500 composite rallied 0.2% and 8.8%, respectively.
One-Year Price Performance
Industry’s Current Valuation
On the basis of forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing advertising and marketing stocks, the industry is currently trading at 13.69 compared with the S&P 500’s 22.84 and the sector’s 29.85.
Over the past five years, the industry has traded as high as 16.53X, as low as 9.11X, and at the median of 13.22X, as the charts below show.
Forward 12-month Price-to-Earnings (P/E)
Bottom Line
Significant rise in digital media consumption should be able to somewhat offset the coronavirus crisis’ unfavorable impact on the industry. Agencies are revamping their offerings to make the most of the rising demand for digital advertisement.
Nevertheless, we believe investors should retain Clear Channel Outdoor (CCO - Free Report) , Fluent (FLNT - Free Report) , Harte Hanks (HHS - Free Report) , Omnicom and WPP in their portfolios as these stocks currently carry a Zacks Rank #3 (Hold).
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Shutterstock
Advertising & Marketing Outlook Dull Amid Coronavirus Mayhem
The companies grouped under the Zacks Advertising and Marketing industry offer a range of services, including advertising, branding, content marketing, digital/direct marketing, digital transformation, financial/corporate business-to-business advertising, graphic arts/digital imaging, healthcare marketing and communications, and in-store design services.
Prominent players from the industry include The Interpublic Group of Companies (IPG - Free Report) and Omnicom (OMC - Free Report) .
Here are the industry’s three major themes:
Zacks Industry Rank Indicates Gloomy Prospects
The Zacks Advertising And Marketingindustry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #229. This rank places it in the bottom 9% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates underperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been steadily pushing their estimates south. Over the past year, the industry’s consensus earnings estimate for 2020 has moved 65.8% south.
Despite the gloomy prospects, we present a few stocks that you may want to consider for your portfolio. But before that it’s worth taking a look at the industry’s performance and current valuation.
Industry Lags the S&P 500 & Sector
Over the past year, the Zacks Advertising And Marketing industry has underperformed the S&P 500 composite and the broader sector.
While the industry has depreciated 40%, the broader sector and the S&P 500 composite rallied 0.2% and 8.8%, respectively.
One-Year Price Performance
Industry’s Current Valuation
On the basis of forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing advertising and marketing stocks, the industry is currently trading at 13.69 compared with the S&P 500’s 22.84 and the sector’s 29.85.
Over the past five years, the industry has traded as high as 16.53X, as low as 9.11X, and at the median of 13.22X, as the charts below show.
Forward 12-month Price-to-Earnings (P/E)
Bottom Line
Significant rise in digital media consumption should be able to somewhat offset the coronavirus crisis’ unfavorable impact on the industry. Agencies are revamping their offerings to make the most of the rising demand for digital advertisement.
None of the stocks in our advertising and marketing universe currently carry a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nevertheless, we believe investors should retain Clear Channel Outdoor (CCO - Free Report) , Fluent (FLNT - Free Report) , Harte Hanks (HHS - Free Report) , Omnicom and WPP in their portfolios as these stocks currently carry a Zacks Rank #3 (Hold).
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>