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Here's Why You Should Retain Omnicom Stock in Your Portfolio
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Omnicom Group Inc. (OMC - Free Report) stock has had an impressive run in the year-to-date period. Shares of the company have gained 22.1% compared with 10.3% growth of the industry it belongs to.
YTD Price Performance
Image Source: Zacks Investment Research
The company’s revenues are anticipated to grow 7% and 4.1% year over year in 2024 and 2025, respectively. Earnings are estimated to rise 7.2% in 2024 and 6.4% in 2025. The company has an estimated long-term (three to five years) earnings per share growth rate of 5.6%.
Factors That Auger Well for OMC’s Success
OMC's presence across multiple segments of the advertising and marketing industry not only diversifies its revenue streams but also equips it with the flexibility and expertise required to steer the ever-evolving and dynamic marketing landscape efficiently. Of the total revenues recorded in 2023, more than 53% was derived from the Advertising & Media segment.
Omnicom Precision Marketing Group expanded its reach by acquiring LeapPoint, a digital advisory company with expertise across the Adobe Content Supply chain. This buyout is part of OMC’s strategic efforts to offer the industry’s most comprehensive content solution, allowing marketers to propel workflows and deliver bespoke experiences to their clients at speed and scale. LeapPoint offers streamlined and automated processes, breakdown operational silos and enhances collaboration across teams for large customers.
The company has invested in real estate, back-office services, procurement, IT, data, analytics, and precision marketing as part of its internal development strategies. Driven by these investments, we anticipate the company will witness higher revenues on the back of organic growth.
In 2023, Omnicom paid dividends of $562.7 million and repurchased shares worth $570.8 million. In 2022, the company paid dividends of $581.1 million and repurchased shares worth $611.4 million. In 2021, the company paid dividends of $592.3 million and repurchased shares of $527.3 million. Such moves not only instill investors’ confidence but also positively impact the bottom line.
Risks Faced by Omnicom
Omnicom operates in a highly competitive industry and failing to stay competitive or retain clients can be detrimental to the top line. Due to internal restructuring and focusing on cost savings, segments like technology and telecommunications have reduced their expenditures. This is anticipated to have a ripple effect on the company's precision marketing segment, potentially causing some challenges or disruptions.
OMC's current ratio (a measure of liquidity) at the end of the third quarter of 2024 was pegged at 0.98, higher than the year-ago quarter's 0.97. Despite an increase in current ratio, a current ratio of less than 1 indicates that the company may have problems paying off its short-term obligations.
OMC’s Zacks Rank & Stocks to Consider
Omnicom carries a Zacks Rank #3 (Hold) at present.
Image: Shutterstock
Here's Why You Should Retain Omnicom Stock in Your Portfolio
Omnicom Group Inc. (OMC - Free Report) stock has had an impressive run in the year-to-date period. Shares of the company have gained 22.1% compared with 10.3% growth of the industry it belongs to.
YTD Price Performance
The company’s revenues are anticipated to grow 7% and 4.1% year over year in 2024 and 2025, respectively. Earnings are estimated to rise 7.2% in 2024 and 6.4% in 2025. The company has an estimated long-term (three to five years) earnings per share growth rate of 5.6%.
Factors That Auger Well for OMC’s Success
OMC's presence across multiple segments of the advertising and marketing industry not only diversifies its revenue streams but also equips it with the flexibility and expertise required to steer the ever-evolving and dynamic marketing landscape efficiently. Of the total revenues recorded in 2023, more than 53% was derived from the Advertising & Media segment.
Omnicom Precision Marketing Group expanded its reach by acquiring LeapPoint, a digital advisory company with expertise across the Adobe Content Supply chain. This buyout is part of OMC’s strategic efforts to offer the industry’s most comprehensive content solution, allowing marketers to propel workflows and deliver bespoke experiences to their clients at speed and scale. LeapPoint offers streamlined and automated processes, breakdown operational silos and enhances collaboration across teams for large customers.
The company has invested in real estate, back-office services, procurement, IT, data, analytics, and precision marketing as part of its internal development strategies. Driven by these investments, we anticipate the company will witness higher revenues on the back of organic growth.
In 2023, Omnicom paid dividends of $562.7 million and repurchased shares worth $570.8 million. In 2022, the company paid dividends of $581.1 million and repurchased shares worth $611.4 million. In 2021, the company paid dividends of $592.3 million and repurchased shares of $527.3 million. Such moves not only instill investors’ confidence but also positively impact the bottom line.
Risks Faced by Omnicom
Omnicom operates in a highly competitive industry and failing to stay competitive or retain clients can be detrimental to the top line. Due to internal restructuring and focusing on cost savings, segments like technology and telecommunications have reduced their expenditures. This is anticipated to have a ripple effect on the company's precision marketing segment, potentially causing some challenges or disruptions.
OMC's current ratio (a measure of liquidity) at the end of the third quarter of 2024 was pegged at 0.98, higher than the year-ago quarter's 0.97. Despite an increase in current ratio, a current ratio of less than 1 indicates that the company may have problems paying off its short-term obligations.
OMC’s Zacks Rank & Stocks to Consider
Omnicom carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks from the broader Zacks Business Services sector are Affirm (AFRM - Free Report) & Amadeus IT Group (AMADY - Free Report) , each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Affirm has a long-term earnings growth expectation of 34.2%. AFRM delivered a trailing four-quarter earnings surprise of 17.8%, on average.
Amadeus IT Group has a long-term earnings growth expectation of 8.6%. AMADY delivered a trailing four-quarter earnings surprise of 7%, on average.