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Omnicom Group Inc. (OMC - Free Report) reported mixed second-quarter 2023 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Earnings of $1.81 per share beat the consensus estimate by 0.6% and increased 7.7% year over year. Total revenues of $3.6 billion lagged the consensus estimate by 0.3% but increased 1.2% year over year.
The increase in the top line resulted from an increase of 3.4% in revenues from organic growth, partially offset by a negative impact of 0.7% due to foreign currency translations and a 1.5% fall in acquisition revenues, net of disposition revenues.
Omnicom shares have gained 45.3% over the past year, significantly outperforming the 23.6% rally of the industry it belongs to and the 15.7% rise of the Zacks S&P 500 composite.
Across fundamental disciplines, revenues from Advertising & Media were up 5.1% compared with our estimated growth of 6.3%. Precision marketing revenues jumped 2.3% compared with our estimate of 14% growth. Commerce and Brand Consulting revenues were up 2.4% versus our estimated growth of 8.2%.
Experiential revenues improved 9.2% compared with our estimated improvement of 16.1%. Public Relations revenues increased 0.1% compared with our estimation of 11.7% growth. Healthcare revenues increased 3%, organically, year over year versus our estimated growth of 6.4%.
Across regional markets, year-over-year organic revenue growth was 2.4% in the United States compared with our estimated growth of 7.3%. U.K. revenues grew 2.5% versus our estimation of 9.8% growth. Other North America grew 8.4%, close to our expectation of 8.5% growth.
For Euro Markets & Other Europe, organic revenue growth was 2.6% compared with our expectation of 7.9% growth. For Latin America, organic revenue growth was 6.9% compared with our expectation of 14.4% growth. Middle East and Africa grew 4% versus our estimated growth of 20.7%. Asia Pacific was up 7.5% year over year compared with our estimated growth of 4.7%.
Margin Performance
EBITA in the quarter came in at $570 million, up 1.4% year over year. EBITA margin was 15.8%, flat with the year-ago quarter. Operating profit of $550.7 million increased 1.7% year over year. The operating margin increased 10 bps to 15.3%.
2023 View
The company expects organic growth to be between 3.5% and 5%. It expects operating margin to be at the top of the 15-15.4% range.
Zacks Rank and Stocks to Consider
Omnicom currently carries a Zacks Rank #3 (Hold).
Investors interested in the Zacks Business Services sector can consider the following better-ranked stocks.
The Zacks Consensus Estimate for the bottom line is pegged at $1.01 per share, up more than 100% from the year-ago figure. The consensus mark for revenues is pegged at $4.7 billion, up 15.8% from the figure reported a year ago. APTV had an average negative surprise of 8.1% in the previous four quarters.
Avis Budget (CAR - Free Report) currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for earnings is pegged at $9.78 per share, down 38.6% from the year-ago figure. The consensus mark for revenues is pegged at $3.19 billion, down 1.6% from the prior-year figure. CAR had an average surprise of 65.2% in the previous four quarters.
S&P Global (SPGI - Free Report) currently has a Zacks Rank of 2. The Zacks Consensus Estimate for the bottom line is pegged at $3.09 per share, up 10% from the year-ago reported figure. The consensus mark for revenues is pegged at $3.05 billion, up 1.9% from the prior-year reported figure. SPGI had an average surprise of 3.1% in the previous four quarters.
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Omnicom's (OMC) Q2 Earnings Beat Estimates, Increase Y/Y
Omnicom Group Inc. (OMC - Free Report) reported mixed second-quarter 2023 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Earnings of $1.81 per share beat the consensus estimate by 0.6% and increased 7.7% year over year. Total revenues of $3.6 billion lagged the consensus estimate by 0.3% but increased 1.2% year over year.
The increase in the top line resulted from an increase of 3.4% in revenues from organic growth, partially offset by a negative impact of 0.7% due to foreign currency translations and a 1.5% fall in acquisition revenues, net of disposition revenues.
Omnicom shares have gained 45.3% over the past year, significantly outperforming the 23.6% rally of the industry it belongs to and the 15.7% rise of the Zacks S&P 500 composite.
Omnicom Group Inc. Price and Consensus
Omnicom Group Inc. price-consensus-chart | Omnicom Group Inc. Quote
Organic Growth Across Disciplines and Regions
Across fundamental disciplines, revenues from Advertising & Media were up 5.1% compared with our estimated growth of 6.3%. Precision marketing revenues jumped 2.3% compared with our estimate of 14% growth. Commerce and Brand Consulting revenues were up 2.4% versus our estimated growth of 8.2%.
Experiential revenues improved 9.2% compared with our estimated improvement of 16.1%. Public Relations revenues increased 0.1% compared with our estimation of 11.7% growth. Healthcare revenues increased 3%, organically, year over year versus our estimated growth of 6.4%.
Across regional markets, year-over-year organic revenue growth was 2.4% in the United States compared with our estimated growth of 7.3%. U.K. revenues grew 2.5% versus our estimation of 9.8% growth. Other North America grew 8.4%, close to our expectation of 8.5% growth.
For Euro Markets & Other Europe, organic revenue growth was 2.6% compared with our expectation of 7.9% growth. For Latin America, organic revenue growth was 6.9% compared with our expectation of 14.4% growth. Middle East and Africa grew 4% versus our estimated growth of 20.7%. Asia Pacific was up 7.5% year over year compared with our estimated growth of 4.7%.
Margin Performance
EBITA in the quarter came in at $570 million, up 1.4% year over year. EBITA margin was 15.8%, flat with the year-ago quarter. Operating profit of $550.7 million increased 1.7% year over year. The operating margin increased 10 bps to 15.3%.
2023 View
The company expects organic growth to be between 3.5% and 5%. It expects operating margin to be at the top of the 15-15.4% range.
Zacks Rank and Stocks to Consider
Omnicom currently carries a Zacks Rank #3 (Hold).
Investors interested in the Zacks Business Services sector can consider the following better-ranked stocks.
Aptiv (APTV - Free Report) currently has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for the bottom line is pegged at $1.01 per share, up more than 100% from the year-ago figure. The consensus mark for revenues is pegged at $4.7 billion, up 15.8% from the figure reported a year ago. APTV had an average negative surprise of 8.1% in the previous four quarters.
Avis Budget (CAR - Free Report) currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for earnings is pegged at $9.78 per share, down 38.6% from the year-ago figure. The consensus mark for revenues is pegged at $3.19 billion, down 1.6% from the prior-year figure. CAR had an average surprise of 65.2% in the previous four quarters.
S&P Global (SPGI - Free Report) currently has a Zacks Rank of 2. The Zacks Consensus Estimate for the bottom line is pegged at $3.09 per share, up 10% from the year-ago reported figure. The consensus mark for revenues is pegged at $3.05 billion, up 1.9% from the prior-year reported figure. SPGI had an average surprise of 3.1% in the previous four quarters.