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Omnicom (OMC) Up 14.5% Since Last Earnings Report: Can It Continue?

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Zacks Equity Research
·2 min read
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A month has gone by since the last earnings report for Omnicom (OMC). Shares have added about 14.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Omnicom due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Omnicom  Q4 Earnings and Revenues Surpass Estimates

Omnicom reported solid fourth-quarter 2020 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of $1.9 per share beat the consensus mark by 14.5% and increased marginally year over year. Total revenues of $3.8 billion marginally surpassed the consensus estimate but decreased 9.3% year over year. This year-over-year decrease occurred due to a fall in acquisition revenues, net of disposition revenues of 0.5% and a decrease in revenues due to negative organic growth of 9.6%.

Other Quarterly Details

Across fundamental disciplines, advertising edged down 9.7%, CRM Consumer Experience was down 15.8%, CRM Execution & Support declined 13.7% and Healthcare decreased 2%, organically, year over year. Public Relations inched up marginally.

Across regional markets, year-over-year decline was 9.4% in the United States, 12.4% in the United Kingdom, 3.9% in the Asia Pacific, 3.2% in the Other North America, 9.2% in the Euro Markets & Other Europe, 9.2% in Latin America and 36.8% in the Middle East and Africa.

Operating profit in the quarter came in at $614.7 million, down 4.9% year over year. Operating margin increased to 16.4% from the year-ago quarter’s 15.6%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, Omnicom has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Omnicom has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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