Back to top

Omnicom (OMC) Remains Poised for Solid Long-Term Growth

Read MoreHide Full Article

On Nov 22, 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 using 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 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.

However, a significant portion of Omnicom’s revenues comes from Europe. At present, when the economy in the region is highly unpredictable, particularly after the Brexit referendum, it becomes difficult for the company to increase revenues and reduce costs. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering the productivity of the company. In addition, the company is susceptible to market risks of losing contracts related to media purchases and production costs, which thereby affects its bottom line and undermines its organic growth to some extent.

Nevertheless, we expect the company to witness higher revenues in the imminent future and remain impressed by the focused growth initiatives of this Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the industry include Accenture plc (ACN - Free Report) , CRA International Inc. (CRAI - Free Report) and Exponent Inc. (EXPO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Accenture is currently trading at a forward P/E of 20.0x and has beaten estimates thrice in the trailing four quarters, the average positive earnings surprise being 3.2%.

Applied Industrial has a long-term earnings growth expectation of 8% and is currently trading at a forward P/E of 24.3x.

Exponent has a long-term earnings growth expectation of 12% and is currently trading at a forward P/E of 39.5x.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>

More from Zacks Analyst Blog

You May Like