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Why Is Omnicom (OMC) Down 8.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for Omnicom (OMC). Shares have lost about 8.8% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Omnicom Q1 Earnings and Revenues Beat Estimates

Omnicom  reported impressive first-quarter 2022 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Earnings of $1.39 per share beat the consensus mark by 8.6% and increased 4.5% year over year, driven by strong margin performance.

Total revenues of $3.4 billion surpassed the consensus estimate by 5.4% but declined slightly year over year. The decline in the top line resulted from negative impact of 2.5% due to foreign currency translations, fall in acquisition revenues and net of disposition revenues of 9.9%, partially offset by an increase of 11.9% in revenues from organic growth.

In the quarter, Omnicom snapped up TA Digital to expand its content management, digital transformation, commerce and customer experience capabilities within the precision marketing group.

Other Quarterly Details

Across fundamental disciplines, revenues from advertising were up 9.1%, Precision marketing revenues jumped 20.3%, Execution & Support revenues increased 6.3%, Commerce and Brand Consulting revenues were up 13.8%, Experiential revenues improved 68%, Public Relations revenues augmented 14%, and Healthcare revenues increased 7.7%, organically, year over year.

Across regional markets, year-over-year organic revenue growth was 10.6% in the United States, 10.3% in the United Kingdom, 9.6% in the Other North America, 13.8% in the Euro Markets & Other Europe, 9.3% in Latin America, and 63.8% in the Middle East and Africa. Asia Pacific was up 11.1% year over year.

Adjusted EBITA in the quarter came in at $485.8 million, up slightly year over year. Adjusted EBITA margin was 14.2%. Operating profit margin was 13.7%, up slightly year over year.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Omnicom has a subpar Growth Score of D, a grade with the same score on the momentum front. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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