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Omnicom (OMC) Down 0.7% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
·3 mins read

A month has gone by since the last earnings report for Omnicom (OMC). Shares have lost about 0.7% in that time frame, underperforming the S&P 500.

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

Omnicom Surpasses Q2 Earnings Estimates

Omnicom Group reported solid mixed second-quarter 2020 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

Adjusted earnings of 92 cents per share beat the consensus mark by 10.8% but declined 45.2% on a year-over-year basis.

Total revenues of $2.8 billion missed the consensus estimate by 3.5% but decreased 24.7% year over year on a reported basis. This year-over-year decrease came in due to a negative foreign-exchange rate impact of 1.7% and a decline in acquisition revenues, net of disposition revenues of 0.1% and a decline in revenue due to negative organic growth of 23%.

Other Quarterly Details

Across fundamental disciplines, advertising edged down 26.6%, CRM Consumer Experience was down 25.6%, CRM Execution & Support declined 27.6%, Public Relations inched down 13.9% and Healthcare increased 3.2%, organically, year over year.

Across regional markets, year-over-year decline was 20.7% in the United States, 23.7% in the United Kingdom, 18.6% in the Asia Pacific and 29.6% in the Other North America. The Euro Markets & Other Europe, Latin America and Middle East and Africa were down 29.4%, 24.1% and 39.4%, respectively.

Operating profit in the first quarter came in at $62.5 million, down 89.1% year over year. Operating margin decreased to 2.2% from the year-ago quarter’s 15.4%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 36.25% due to these changes.

VGM Scores

Currently, Omnicom has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 A. 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 these revisions looks promising. 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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