Shares of Omnicom Group Inc (OMC) hit a 52-week high of $74.04 during yesterday’s trading session. However, the stock closed the session at $73.99, reflecting a solid year-to-date return of 43.8%. The average trading volume of the stock aggregated 1,258,769 shares.
The stock is currently trading at a forward P/E of 19.1x and has a long-term earnings growth expectation of 7.0%.
Focused expansion into large markets, winning new clients and operational excellence are the primary driving factors for Omnicom.
Omnicom is one of the largest advertising, marketing and corporate communications companies in the world. On the operational front, Omnicom offers cost-effective marketing services in the field of advertising, which is expected to improve margins going forward.
Recently, Omnicom and Publicis Groupe SA (PUBGY) won European Union regulatory approval for their $35.1 billion merger, which is likely to create the world's biggest advertising agency. This merger is anticipated to reopen avenues for growth and success for the individual companies. The merger will enable the agencies to make best use of their skilled workforce, diverse product offerings and enhanced global footprint to leverage a list of global as well as local clients and reap synergistic benefits.
Omnicom has a track record of winning new clients and receiving additional deals from the existing ones. The company’s business mix is well diversified geographically and benefits largely from growing markets. Additionally, the company is also building upon its digital and analytical capabilities by investing in agencies and partnering with innovative technology companies in key markets.
The increasing demand for media services, speedy growth of technologies and massive proliferation of channels are likely to drive the company’s growth going forward.
Over the last 7 days, the earnings estimates did not show any upward or downward revision for 2013. Although there is a lacuna of estimate revisions, we envision an uptrend for the stock backed by its strong growth potential.
Other Stocks to Consider
Omnicom currently has a Zacks Rank #4 (Sell ).Other stocks worth considering in the industry include The Interpublic Group of Companies, Inc (IPG) and WPP plc (WPPGY). All these stocks carry a Zacks Rank #2 (Buy).