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Omnicom (OMC) Surpasses Q1 Earnings and Revenue Estimates

Zacks Equity Research

Omnicom Group Inc. OMC reported solid first-quarter 2019 results wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of $1.17 per share beat the consensus mark by 9 cents and increased 2.6% on a year-over-year basis.

Omnicom Group Inc. EPS Diluted (TTM)

Omnicom Group Inc. EPS Diluted (TTM) | Omnicom Group Inc. Quote

Total revenues of $3.5 billion beat the consensus estimate by $2 million but decreased 4.4% year over year on a reported basis. The year-over-year decrease was due to negative foreign exchange rate impact of 3.4% and a decrease in acquisition revenues, net of disposition revenues of 3.6%, partially offset by organic revenue growth of 2.5%.

Shares of Omnicom have gained 3.9% over the past year against a 13.1% decline of the  industry it belongs to.

Let’s check out the numbers in detail.

Revenues by Segment

Advertising segment revenues of $1.9 billion increased 1.1% year over year on a reported basis and 5.1% organically. The segment accounted for 55% of total revenues in the reported quarter.

CRM Consumer Experience revenues of $605.8 million declined 4.6% year over year on a reported basis and 0.6% organically. The segment contributed 18% to total revenues.

CRM Execution & Support revenues of $349.5 million decreased 31.3% year over year on a reported basis and 3.3% organically. It accounted for 10% of total revenues.

PR revenues of $334.2 million declined 3.5% year over year on a reported basis and 0.5% organically. It contributed 10% to total revenues.

Healthcare revenues of $258.1 million were up 8.2% year over year on a reported basis and 6.8% organically. It accounted for 7% of total revenues.

Revenues by Regions

Revenues from United States came in at $1.9 billion, up 0.2% year over year on a reported basis and 2% organically. The region accounted for 54% of total revenues in the reported quarter.

Revenues from Other North America came in at $105.1 million, up 0.4% year over year on a reported basis and 6.1% organically. The region accounted for 3% of total revenues.

Revenues from UK came in at $338.7 million, down 5.4% year over year on a reported basis but up 1.3% organically. It accounted for 10% of total revenues.

Euro & Other Europe revenues of $606.8 million declined 14.8% year over year on a reported basis but improved 4% organically. The region contributed 18% to total revenues.

Revenues from Asia Pacific came in at $366.2 million, down 6.6% year over year on a reported basis but increased 2.1% organically. It accounted for 11% of total revenues.

Latin American revenues of $89 million declined 17.9% year over year on a reported basis but improved 3% organically. It contributed 3% to total revenues.

Revenues from the Middle East and Africa were $79 million, up 7.6% year over year on a reported basis and 12.8% organically. It accounted for 2% of total revenues.

Operating Results

Operating profit in the quarter increased 1.7% year over year to $428.9 million. Operating margin increased to 12.4% from 11.6% in the year-ago quarter. 

Earnings before interest, taxes and amortization (EBITA) for the reported quarter were $450.5 million, slightly up from $449.2 million in the year-ago quarter. EBITA margin came in at 13% compared with 12.4% in the year-ago quarter.

Cash Flow

The company used $395.6 million in operating activities and generated free cash flow of $340.7 million in the quarter. Capital expenditures were $27.2 million. It paid $134.8 million as dividends to common shareholders.

Zacks Rank and Other Stocks to Consider

Currently, Omnicom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Zacks Business Services sector are Automatic Data Processing ADP, Broadridge Financial BR and WEX WEX, each carrying a Zacks Rank #2. The long-term expected EPS (three to five years) growth rate for Broadridge, Automatic Data Processing and WEX is 10%, 13% and 15%, respectively.

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Omnicom Group Inc. (OMC) : Free Stock Analysis Report
 
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