Should You Be Concerned With Omnicom Group Inc’s (NYSE:OMC) -4.84% Earnings Drop?
Measuring Omnicom Group Inc’s (NYSE:OMC) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess OMC’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Omnicom Group
Was OMC’s recent earnings decline indicative of a tough track record?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to analyze different stocks in a uniform manner using new information. For Omnicom Group, its latest trailing-twelve-month earnings is US$1.09B, which compared to last year’s level, has plunged by -4.84%. Given that these values may be fairly nearsighted, I’ve computed an annualized five-year value for OMC’s net income, which stands at US$1.04B This means that although earnings declined from the prior year, over the longer term, Omnicom Group’s earnings have been rising on average.
What’s enabled this growth? Let’s see whether it is solely owing to industry tailwinds, or if Omnicom Group has seen some company-specific growth. Over the last few years, Omnicom Group expanded its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Scanning growth from a sector-level, the US media industry has been growing its average earnings by double-digit 25.63% in the prior twelve months, and a more subdued 7.96% over the past five years. This shows that whatever tailwind the industry is deriving benefit from, Omnicom Group has not been able to gain as much as its industry peers.
What does this mean?
Omnicom Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. You should continue to research Omnicom Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for OMC’s future growth? Take a look at our free research report of analyst consensus for OMC’s outlook.
Financial Health: Is OMC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
