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Diversified Revenue Streams Aid Omnicom Group Amid High Competition
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Omnicom Group Inc. (OMC - Free Report) has had an impressive run in the year-to-date period. The company’s shares have gained 19.2% compared with the 7.8% rally of its industry.
OMC reported impressive second-quarter 2024 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Earnings of $1.95 per share beat the consensus estimate by 3.7% and gained 7.7% year over year. Total revenues of $3.9 billion surpassed the consensus estimate by 1.1% and increased 6.8% on a year-over-year basis.
How is OMC Doing?
Omnicom Group operates in different segments of the advertising and marketing industry. It has not only diversified its revenue stream but also equipped it with the flexibility and expertise required to navigate the dynamic market landscape effortlessly. OMC derived more than 53% of its top line from the Advertising & Media Segment. Observing this trend and the current market, we anticipate the top line to grow 7.8% year over year in 2024.
OMC has made multiple investments, including real estate, back-office services, procurement, IT, data, analytics and precision marketing. These initiatives are part of the company’s internal development. We expect these initiatives to drive organic growth, which, in turn, will assist the company in generating higher revenues.
We are impressed with Omnicom Group’s strategy to pay out dividends and conduct consistent share repurchases. In 2023, the company paid out dividends of $562.7 million and repurchased shares worth $570.8 million. In 2022, it paid out dividends of $581.1 million and repurchased shares worth $611.4 million. In 2021, Omnicom Group paid out dividends of $592.3 million and repurchased shares of $527.3 million. These strategies not only boost the bottom line but also make the stock more appealing to dividend-seeking investors.
While OMC is observed to reap the benefits of the factors mentioned above, it is affected by fierce competition. Omnicom Group operates in a competitive industry, therefore, it must adapt swiftly, offer the best of services across the globe and secure clients. If the company cannot stay competitive or retain clients, it can lead to losing customers. As a result of internal restructuring and focus on cost savings, segments such as technology and telecommunications have increased expenses on short notice. It might have an impact on OMC’s precision marketing strategy causing problems.
Omnicom's current ratio (a measure of liquidity) at the end of the second quarter of 2024 was pegged at 0.93, lower than the year-ago quarter's 0.96. A current ratio of less than 1 indicates that the company might face issues paying off its short-term obligations.
Image: Bigstock
Diversified Revenue Streams Aid Omnicom Group Amid High Competition
Omnicom Group Inc. (OMC - Free Report) has had an impressive run in the year-to-date period. The company’s shares have gained 19.2% compared with the 7.8% rally of its industry.
OMC reported impressive second-quarter 2024 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Earnings of $1.95 per share beat the consensus estimate by 3.7% and gained 7.7% year over year. Total revenues of $3.9 billion surpassed the consensus estimate by 1.1% and increased 6.8% on a year-over-year basis.
How is OMC Doing?
Omnicom Group operates in different segments of the advertising and marketing industry. It has not only diversified its revenue stream but also equipped it with the flexibility and expertise required to navigate the dynamic market landscape effortlessly. OMC derived more than 53% of its top line from the Advertising & Media Segment. Observing this trend and the current market, we anticipate the top line to grow 7.8% year over year in 2024.
Omnicom Group Inc. Revenue (TTM)
Omnicom Group Inc. revenue-ttm | Omnicom Group Inc. Quote
OMC has made multiple investments, including real estate, back-office services, procurement, IT, data, analytics and precision marketing. These initiatives are part of the company’s internal development. We expect these initiatives to drive organic growth, which, in turn, will assist the company in generating higher revenues.
We are impressed with Omnicom Group’s strategy to pay out dividends and conduct consistent share repurchases. In 2023, the company paid out dividends of $562.7 million and repurchased shares worth $570.8 million. In 2022, it paid out dividends of $581.1 million and repurchased shares worth $611.4 million. In 2021, Omnicom Group paid out dividends of $592.3 million and repurchased shares of $527.3 million. These strategies not only boost the bottom line but also make the stock more appealing to dividend-seeking investors.
While OMC is observed to reap the benefits of the factors mentioned above, it is affected by fierce competition. Omnicom Group operates in a competitive industry, therefore, it must adapt swiftly, offer the best of services across the globe and secure clients. If the company cannot stay competitive or retain clients, it can lead to losing customers. As a result of internal restructuring and focus on cost savings, segments such as technology and telecommunications have increased expenses on short notice. It might have an impact on OMC’s precision marketing strategy causing problems.
Omnicom's current ratio (a measure of liquidity) at the end of the second quarter of 2024 was pegged at 0.93, lower than the year-ago quarter's 0.96. A current ratio of less than 1 indicates that the company might face issues paying off its short-term obligations.
Zacks Rank & Stocks to Consider
OMC carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader Zacks Business Services sector are Equifax (EFX - Free Report) and Corpay, Inc. (CPAY - Free Report) .
Equifax has a Zacks Rank of 2 (Buy) at present. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EFX has a long-term earnings growth expectation of 19.3%. It delivered a trailing four-quarter earnings surprise of 3.2%, on average.
Corpay carries a Zacks Rank of 2 at present. It has a long-term earnings growth expectation of 14.1%.
CPAY delivered a trailing four-quarter earnings surprise of 0.2%, on average.