Omnicom (OMC) Up 5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Omnicom (OMC). Shares have added about 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 drivers.
Omnicom Q4 Earnings and Revenues Beat Estimates
Omnicom Group Inc. reported impressive fourth-quarter 2023 results, wherein both earnings and revenues beat the Zacks Consensus Estimate.
Earnings of $2.16 per share beat the consensus estimate by 1.9% and increased 5.3% year over year. Total revenues of $4.06 billion surpassed the consensus estimate by 1.5% and increased 5% year over year.
The increase in revenues is due to 4.4% organic growth and 1.7% foreign currency translations. This was partially offset by a 0.7% decline in acquisition revenues.
Organic Growth Across Disciplines and Regions
Across fundamental disciplines, revenues from Advertising & Media were up 9.3% compared with our estimated growth of 5.6%. Precision marketing revenues dipped 1.1% and Experiential revenues declined 8%.
Public Relations revenues decreased 2.9%, while Healthcare revenues increased 3.6% organically year over year compared with our suggested growth of 4.5%. Commerce and Brand Consulting revenues increased 1% compared with our anticipated growth of 2.8%. Execution and support declined 0.4% compared with our projected fall of 1.7%.
Across regional markets, year-over-year organic revenue growth was 0.6% in the United States, 5.8% in the U.K., 14.1% in Euro Markets & Other Europe, 13.7% in Latin America and 10.9% in Asia Pacific. Middle East & Africa and Other North America revenues declined 17.3% and 1.3%, respectively.
Margin Performance
EBITDA in the quarter came in at $668.1 million, up 0.8% year over year. EBITDA margin was 16.5%, down 60 basis points (bps) year over year. Adjusted operating profit of $661.2 million increased 2.9% year over year. The operating margin decreased 30 bps to 16.3%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Omnicom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Omnicom Group Inc. (OMC) : Free Stock Analysis Report
