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Omnicom (OMC) Down 9.4% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Omnicom (OMC - Free Report) . Shares have lost about 9.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Omnicom due for a breakout? 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 drivers.
Omnicom Q2 Earnings and Revenues Beat Estimates
Omnicom Group Inc. 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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Omnicom has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 indicates a downward shift. 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) Down 9.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Omnicom (OMC - Free Report) . Shares have lost about 9.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Omnicom due for a breakout? 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 drivers.
Omnicom Q2 Earnings and Revenues Beat Estimates
Omnicom Group Inc. 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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Omnicom has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 indicates a downward shift. Notably, Omnicom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.