Back to top

Omnicom (OMC) Focuses on Core Operations to Spur Growth

Read MoreHide Full Article

On Oct 6, Zacks Investment Research updated the research report on global marketing and corporate communications firm, Omnicom Group Inc. (OMC - Free Report) .

Omnicom is one of the largest advertising, marketing and corporate communications companies in the world. Its agencies operate in all the major markets across the globe and provide an extensive range of services, which are grouped into four fundamental disciplines: Traditional Media Advertising, Customer Relationship Management, Public Relations and Specialty Communications.

In order to spur growth, Omnicom has started to use open-source technique to access the current information in the market. The increasing demand for media services, speedy growth of technologies and massive proliferation of channels are likely to translate into incremental revenues in the future.

Omnicom is also witnessing a healthy performance in developed markets like the U.S. and developing markets like Asia. The measures undertaken by the company to reduce costs have helped it to boost earnings. The company 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.

Omnicom is currently concentrating on strengthening its business and expanding its client base globally through the acquisition of complementary companies. During the second quarter of 2016, the company acquired Rabin Martin, a global health strategy consulting firm. Rabin Martin’s high-profile client base will augment Omnicom Public Relation’s already strong healthcare offerings. Omnicom also acquired BioPharm Communications, a leading communications agency that serves 17 of the 25 major pharmaceutical companies across the globe. The acquisition will enable Omnicom to expand its leadership position in a highly competitive data-driven healthcare market.

We expect the company to witness higher revenues in the imminent future on the back of such acquisitions and remain impressed with the focused growth initiatives of this Zacks Rank #2 (Buy) stock. Some other favorably ranked stocks in the industry include The Hackett Group, Inc. (HCKT - Free Report) , Accenture plc (ACN - Free Report) and Cintas Corporation (CTAS - Free Report) , each carrying the same Zacks Rank as Omnicom. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hackett has a long-term earnings growth expectation of 17.5% and is currently trading at a forward P/E of 21.8x.

Accenture posted an average positive earnings surprise of 3.2% in the trailing four quarters, beating estimates thrice. Accenture has a long-term earnings growth expectation of 10.1% and is currently trading at a forward P/E of 20.0x.

Cintas has a long-term earnings growth expectation of 11% and is currently trading at a forward P/E of 24.3x. Cintas has a positive earnings surprise history with an average of 5.5% in the trailing four quarters, comprehensively beating estimates in each quarter.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

More from Zacks Analyst Blog

You May Like