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Omnicom's (OMC) Diverse and Consistent Operations Aid Growth

Omnicom Group Inc’s. OMC internal development initiatives along with consistent and diverse operations enable it to provide customer-centric strategic business solutions. Efficient operations through investment in real estate, back-office services, procurement and IT have been boding well.

Omnicom Group Inc. reported impressive first-quarter 2023 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate. Earnings of $1.56 per share beat the consensus estimate by 13%. Earnings per share increased 12.2% year over year.

Total revenues of $3.4 billion surpassed the consensus estimate by 2.3%. The top line increased 1% year over year. The increase in the top line resulted from a 5.2% rise in revenues from organic growth, partially offset by a negative impact of 3.2% due to foreign currency translations and a 1% fall in acquisition revenues, net of disposition revenues.

Driven by the above-mentioned tailwinds, Omnicom has outperformed its industry in the past year, growing 18.8% against its industry’s13.4% decrease.

Omnicom Group Inc. Price

Omnicom Group Inc. Price
Omnicom Group Inc. Price

Omnicom Group Inc. price | Omnicom Group Inc. Quote

Current Situation of Omnicom

Omnicom’s internal development initiatives to increase operational efficiency benefit the company by enabling organic growth. The company is investing in real estate, back office services, procurement, IT, data, analytics and precision marketing.

Omnicom has been strategically divesting from underperforming and non-core businesses and reorganizing to meet clients’ ever-changing needs. The company's net income for first-quarter 2023 increased 30.9% from the year-ago reported quarter.

Omnicom’s endeavors to reward its shareholders through regular dividend payments and share purchases are praiseworthy. In 2022, 2021 and 2020, the company returned $581.1 million, $592.3 million and $562.7 million as dividends, respectively. OMC repurchased $611.4 million, $527.3 million and $222 million worth of shares in 2022, 2021 and 2020, respectively.

Some Concerning Points

Omnicom’s international operations, which contributed around 48% to revenues in 2022, consequently expose it to the risk of foreign currency fluctuations. Appreciation or depreciation of the U.S. dollar versus foreign currencies impacts the company’s results.

Omnicom’s current ratio at the end of first-quarter 2023 was pegged at 0.96, lower than the current ratio of 0.97 reported at the end of the prior-year quarter. It indicates that the company may have problems meeting its short-term debt obligations.

Zacks Rank and Other Stocks to Consider

OMC currently carries a Zacks Rank #2 (Buy). Investors interested in the Zacks Business Services sector can also consider the following stocks:

Green Dot GDOT: For second-quarter 2023, the Zacks Consensus Estimate of Green Dot’s revenues suggests a decline of 4.5% year over year to $339.2 million and the same for earnings indicates a 56.8% plunge to 32 cents per share. The company has an impressive earning surprise history, beating the consensus mark in all four trailing quarters, the average surprise being 37.3%.

GDOT has a Value score of A and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Maximus MMS: For second-quarter 2023, the Zacks Consensus Estimate of Maximus’ revenues suggests an increase of 6.2% year over year to $1.2 billion and the same for earnings indicates a 35.9% rise to $1.06 per share. The company has an impressive earning surprise history, beating the consensus mark in three instances and missing on one instance, the average surprise being 9.6%.

MMS has a VGM score of A along with a Zacks Rank #2 (Buy).

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

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