investora2z
11 years ago
The last few sessions have been great for Omnicom as it has rebounded sharply after the post-earnings correction. Now it is up around 10% from the recent lows. However, the volumes have not been too high during the recovery. This helps the sentiments as the stock had corrected significantly after the better than expected earnings. Now the stock is up around 22% over one year, and is nearly 45% above its 52 week low of ~$45 made in November. In Q2'13, there was 2% yoy growth in revenues and net income. The growth in emerging markets helped the company beat the analyst estimates. The operating margins expanded. The company has been doing well fundamentally over the years. It is possible that the stock may take a breather and correct a bit as the run up has been very fast. The stock is about 9% away from the 52 week high. It may require a major trigger for the stock to cross that hurdle. A seekingalpha article had predicted 7% growth in EPS based on the company's expansion in the Asian and Latin American markets. The company is also likely to gain from the rising demand for digital marketing. The merger with Publicis is also expected to help improve the overall performance of the company. It will help it enhance its capabilities in the digital arena. There may be some problems due to the merger as the two companies serve rival customers. This may lead to loss of some major accounts. Further, competition in the advertising industry is high and fragmented. IZEA (IZEA), a company in the social media sponsorship / native ads space, recently published results of a survey indicating the changed dynamics of online advertising. The exact impact of the merger will be more apparent over the next several quarters and years.
investora2z
11 years ago
The stock has corrected by more than 14% after the earnings. The earnings were good as strong digital spending and good growth in emerging markets helped growth in revenues and net income. The operating margins also expanded slightly. As per a recent article on seekingalpha, Omnicom is likely to benefit from the rising demand for digital marketing. The merger with Publicis will help it become a leading media and communication company in the world, and, more importantly, it will enhances its digital capabilities. This is extremely important for the company to adapt to changing times and serve its customers better. The focus on emerging markets will help it achieve higher growth. As per the author, expansion in Asian and Latin American countries will help the company improve its EPS by around 7.3% to $3.86 per share this year and $4.27 next year. The company has done well over the years with steady growth, and is expected to do better after the merger. Though there are other voices which say that the merged entity will lose some big clients because the two companies service rival companies. For example, Omnicom serves PepsiCo (PEP), AT&T (T), and Microsoft (MSFT), while Publicis serves Coca-Cola (KO), Verizon (VZ), and Google (GOOG). The exact impact of these aspects can only be known later. Advertising industry has a fast changing landscape, and online advertising is gaining importance. Native advertising / social media sponsorship is also becoming a preferred method to influence customers. IZEA (IZEA) a company in this space recently posted record numbers. The merger will help the company gain access and insights about other segments of the market so that it can alter its strategy accordingly. The synergies may help enhance the competitive advantage. This may translate into faster growth in revenues and net income.
investora2z
11 years ago
The earnings were okay with growth in revenues and net income. Strong digital spending and better than expected results in emerging markets, helped the company achieve reasonably good performance. Both the revenue and net income increased by more than 2%, and the operating margins improved from 14.2% to 14.4%. Growth in China, India, Hong Kong, Singapore, Thailand, Malaysia and Indonesia was better than expected. The stock has corrected a bit after the earnings, and is now about 10% below the 52 week high of $70 made just before the results. Still, the stock has done reasonably well over the last one year with 24% appreciation. The dividend yield of 2.5% adds to the returns for the investors. Omnicom has been a steady performer with decent growth in revenues and net income over the past few years. There has been some slowing down of the pace of growth over the last few quarters, but that may change if the company can focus on the high growth markets and segments of the advertising business. Emerging markets are extremely important for growth of ad companies, and it is good that Omnicom has been able to leverage the faster growth in those markets. Focus on emerging trends, like increased popularity of online advertising, is also important. Native advertising / social media sponsorship is also gaining in importance. IZEA (IZEA) provides a social media platform where advertisers can pay celebrities and other influencers to tweet, pin, blog, youtube, instagram etc. about their products. For Omnicom, there has been a reduction in debt from $4.44 billion to $4.04 billion on a sequential basis. The proposed merger with Publicis (PUB) is a major step for the company. There was news that an investor has sued Omnicom to stop the merger saying that the terms are unfair to Omnicom shareholders.
investora2z
11 years ago
RBC Capital have recently raised their price target for Omnicom from $65 to $69. The immediate trigger for the stock is the upcoming earnings on July 18. The last earnings were not very robust as the revenues increased by 2.8% and the net income remained nearly flat. The stock has already appreciated significantly over the last few quarters and is trading around all time highs. The recent rise has factored a lot of future positives. The earnings need to be reasonably good so that the momentum can continue. Any slippage may lead to a correction. There has been some sluggishness in the last few quarters, and the margins have fallen on a ttm basis. However, the company has been a consistent performer over the years with growth in revenue and net income. It has paid dividends consistently, and the 5 year average dividend yield is around 2%. The payout ratio is also reasonable at 36%. Growth in revenues is not easy in the competitive environment, especially in view of the new segments and increased competition. There is a need for faster adaptability, to leverage the growth in popular media. Social media is becoming and extremely popular medium for advertising and sub-segments like social media sponsorships are also gaining in importance. IZEA (IZEA) provides a social media sponsorship platform where advertisers can pay celebrities and other influencers to tweet, pin, blog, youtube, instagram etc., about their products. Advertisers are looking for new methods to attract customers online. At present Omnicom is trading at 18 times ttm earnings and 15 times forward earnings. The price to sales is also low at 1.20. Debt seems to be a bit high, and the current ratio is also low. However, the main metric to watch in the earnings will be the margins / bottomline. Any positive surprise on that can lead to strengthening of the uptrend.
Penny Roger$
13 years ago
Omnicom Group Inc. (Omnicom) is a holding company, providing professional services to the clients through multiple agencies around the world. It is engaged in providing advertising, marketing and corporate communication services. The Company’s agencies provide a range of services, which it groups into four disciplines: traditional media advertising, customer relationship management (CRM), public relations and specialty communications. The wholly owned subsidiaries of the Company include Omnicom capital Inc. (OCI) and Omnicom Finance Inc. (OFI). In October 2010, the Company acquired Sales Power. In October 2010, the Company’s Diversified Agency Services (DAS) announced that it has acquired medical communications agency Excerpta Medica from Elsevier, a division of Reed Elsevier Group plc. In October 2010, the Company acquired Unisono Field Marketing. In June 2011, the Company formed Omnicom Greater China. In November 2011, the Company acquired Marina Maher Communications.
http://www.google.com/finance?q=OMC
Trade smarter, not harder: Unleash your inner pro with our toolkit and live discussions.
Monksdream
7 months ago
ValueInvestor15
8 years ago
Hot Features
Premium
