Here's Why Investors Should Hold on to Omnicom (OMC) Stock
Omnicom Group Inc. OMC is benefitting from internal development initiatives and investor-friendly steps.
OMC has a long-term earnings growth expectation of 2.6%. Omnicom delivered a trailing four-quarter earnings surprise of 12.5%, on average.
Factors That Augur Well
Omnicom has a consistent record of returning value to shareholders through dividends and share repurchases. In 2021, the company paid out dividends of $592.3 million and repurchased shares amounting to $527.3 million. It paid $562.7 million in dividends and repurchased shares worth $222 million in 2020. In 2019, Omnicom paid $564.3 million in dividends and repurchased shares worth $610.2 million. Such moves instill investors’ confidence and positively impact earnings per share.
Omnicom’s continues to focus on its internal development initiatives. To increase operational efficiency, the company invested in real estate, back office services, procurement and IT. It also invested in data, analytics and precision marketing. Driven by such positives, we expect Omnicom to witness higher revenues on the back of organic growth.
A Key Risk
Omnicom's current ratio (a measure of liquidity) at the end of the June 2022 quarter was pegged at 0.95, lower than the June 2021 current ratio of 1.00. Lowering the current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations.
Zacks Rank and Stocks to Consider
Omnicom currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget Group, Inc. CAR, Genpact Limited G and CRA International, Inc. CRAI.
Avis Budget sports a Zacks Rank #1 at present. CAR has an earnings growth rate of 108.4% for 2022.
Avis Budget delivered a trailing four-quarter earnings surprise of 69.5%, on average.
Genpact carries a Zacks Rank #2 (Buy) at present. G has a long-term earnings growth expectation of 12.3%.
Genpact delivered a trailing four-quarter earnings surprise of 10.1%, on average.
CRA International flaunts a Zacks Rank of 1, currently. CRAI has a long-term earnings growth expectation of 14.3%.
CRAI delivered a trailing four-quarter earnings surprise of 26%, on average.
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