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Here's Why You Should Retain Omnicom (OMC) in Portfolio Now

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·2 min read
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Omnicom Group Inc. OMC currently benefits from its shareholder-friendly measures and internal development initiatives.

OMC has an expected long-term earnings per share (three to five years) growth rate of 5.3%. Further, earnings are anticipated to register growth of 3.1% and 8% in 2022 and 2023, respectively.

Factors That Augur Well

Omnicom has a consistent record of returning value to its shareholders in the form of dividends and share repurchases. In 2021, OMC paid out dividends worth $592.3 million and repurchased shares amounting to $527.3 million.

OMC paid out $562.7 million as dividends and bought back shares worth $222 million in 2020. In 2019, Omnicom paid out $564.3 million of dividends and repurchased shares worth $610.2 million. Such moves instill investors’ confidence in the stock and drive the earnings per share.

Omnicom continues to focus on its internal development initiatives. To increase operational efficiency, OMC is making steady investments in real estate, back-office services, procurement and IT. OMC is also investing in data, analytics and precision marketing. Driven by such positives, we expect OMC to witness higher revenues on the back of its organic growth.

A Key Risk

Omnicom's current ratio at the end of the March quarter was pegged at 0.95, lower than the current ratio of 0.98 reported at the end of the December quarter and the prior-year quarter’s 1.02. Decreasing 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, Cross Country Healthcare CCRN and Automatic Data Processing, Inc. ADP.

Avis Budget sports a Zacks Rank #1 at present. CAR has a long-term earnings growth expectation of 19.4%.

Avis Budget delivered a trailing four-quarter earnings surprise of 102%, on average.

Cross Country Healthcare sports a Zacks Rank of 1. CCRN has a long-term earnings growth expectation of 6.9%.

Cross Country Healthcare delivered a trailing four-quarter earnings surprise of 29.2%, on average.

Automatic Data Processing carries a Zacks Rank #2 (Buy), currently. ADP has a long-term earnings growth expectation of 12%.

Automatic Data Processing delivered a trailing four-quarter earnings surprise of 6.2%, on average.  


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