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Omnicom (OMC) Down 1% Since Last Earnings Report: Can It Rebound?

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  • OMC

It has been about a month since the last earnings report for Omnicom (OMC). Shares have lost about 1% 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 catalysts.

Omnicom Q2 Earnings and Revenues Beat Estimates

Omnicom reported impressive second-quarter 2021 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Earnings of $1.46 per share beat the consensus mark by 9.8% and increased 58.7% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 6.7% and increased 27.5% year over year.

The top line was driven by increase in revenues from organic growth of 24.4% and positive impact of 5.4% due to foreign currency translations, but partially offset by a fall in acquisition revenues and net of disposition revenues of 2.2%.

Other Quarterly Details

Across fundamental disciplines, advertising was up 29.8%, CRM Precision marketing jumped 25%, CRM Execution & Support increased 22.7%, CRM Commerce and Brand Consulting was up 15.2%, CRM Experiential improved 53%, Public Relations was up 15.1% and Healthcare increased 4.5%, organically, year over year.

Across regional markets, year-over-year growth was 19.9% in the United States, 23.8% in the United Kingdom, 37.1 % in the Other North America, 34.5% in the Euro Markets & Other Europe, 20.8% in Latin America and 42.8% in the Middle East and Africa. Asia Pacific was up 27.9% year over year.

Operating profit in the quarter came in at $568.4 million, compared with 62.5 million in the year-ago quarter. Operating margin increased to 15.9% from the year-ago quarter’s 2.2%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -8.25% due to these changes.

VGM Scores

Currently, Omnicom has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 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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