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Omnicom Group (OMC)
NYSE:OMC

Omnicom Group (OMC) AI Stock Analysis

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Omnicom Group

(NYSE:OMC)

76Outperform
Omnicom Group demonstrates strong financial performance with effective capital management, contributing to a high overall score. The positive sentiment from the earnings call and strategic initiatives, including significant new business wins and acquisitions, further support the company's growth potential. However, technical indicators suggest caution, as the stock is in a bearish trend, and challenges in specific sectors pose risks. The reasonable valuation and attractive dividend yield provide additional support, making Omnicom a compelling option in the traditional media industry.
Positive Factors
Acquisition
Omnicom's acquisition of Interpublic creates the new number-one global ad holding company.
Client Wins
Omnicom scored a big win of the Amazon US account recently, which should flow into revenue starting Q1'25.
Negative Factors
Integration Risks
Integration risk is real in terms of client, staff, and IT friction.

Omnicom Group (OMC) vs. S&P 500 (SPY)

Omnicom Group Business Overview & Revenue Model

Company DescriptionOmnicom Group Inc. is a leading global marketing and corporate communications company headquartered in New York City. It operates through a network of agencies offering a diverse range of services including advertising, marketing services, specialty communications, interactive/digital media, and media buying services. Omnicom serves a broad spectrum of industries, including automotive, consumer products, healthcare, and technology, delivering customized solutions to enhance brand recognition and consumer engagement.
How the Company Makes MoneyOmnicom Group generates revenue primarily through the provision of advertising and marketing communication services to a wide array of clients globally. The company earns money by offering a comprehensive suite of services such as strategic media planning and buying, digital and interactive marketing, direct and promotional marketing, public relations, and other specialty communications services. Its revenue streams are largely derived from fees and commissions for these services, with major clients often entering into long-term contracts. Omnicom's earnings are also influenced by its strategic partnerships and acquisitions, which expand its service offerings and market reach. Additionally, the company benefits from its global presence, allowing it to serve multinational clients with integrated solutions tailored to various regional markets.

Omnicom Group Financial Statement Overview

Summary
Omnicom Group's financial performance is robust, with strong profitability, growth, and cash flow metrics. The company has demonstrated effective capital management and operational efficiency. While the balance sheet shows manageable debt levels, ongoing monitoring of leverage is advisable to mitigate potential risks in changing economic conditions. Overall, Omnicom Group is well-positioned in the traditional media industry, reflecting both stability and growth potential.
Income Statement
85
Very Positive
Omnicom Group exhibits strong profitability with a gross profit margin of approximately 18.6% and a net profit margin of 10% in 2024. The company has shown consistent revenue growth, with a 6.8% increase from 2023 to 2024, indicating robust market demand and effective business strategies. EBIT and EBITDA margins are solid, reflecting operational efficiency.
Balance Sheet
78
Positive
The balance sheet reveals a stable financial structure with a debt-to-equity ratio of 1.64, which is manageable. The equity ratio is around 14.2%, suggesting moderate leverage. Return on equity is strong at 37.5%, highlighting effective use of equity capital to generate profits. However, the relatively high debt levels pose a potential risk if market conditions change.
Cash Flow
82
Very Positive
Cash flow analysis shows a healthy free cash flow growth rate of 18.6% in 2024, indicating strong cash generation capabilities. The operating cash flow to net income ratio of 1.1 reflects efficient cash conversion, while the free cash flow to net income ratio of 1.01 underscores the company's ability to maintain liquidity and fund operations effectively.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
15.69B14.69B14.29B14.29B13.17B
Gross Profit
2.92B2.71B2.68B2.79B2.18B
EBIT
2.27B2.10B2.08B2.20B1.60B
EBITDA
2.61B2.42B2.38B2.32B1.95B
Net Income Common Stockholders
1.48B1.39B1.30B1.40B951.20M
Balance SheetCash, Cash Equivalents and Short-Term Investments
4.34B4.43B4.34B5.32B5.60B
Total Assets
29.62B28.04B27.00B28.42B27.65B
Total Debt
6.87B6.50B6.49B6.65B6.93B
Net Debt
2.53B2.07B2.21B1.33B1.32B
Total Liabilities
24.45B23.40B22.84B24.65B24.07B
Stockholders Equity
4.19B3.62B3.25B3.27B3.08B
Cash FlowFree Cash Flow
1.59B1.34B848.30M1.28B1.65B
Operating Cash Flow
1.73B1.42B926.50M1.95B1.72B
Investing Cash Flow
-1.06B79.10M-380.90M-709.20M-136.10M
Financing Cash Flow
-582.00M-1.39B-1.36B-1.39B-408.40M

Omnicom Group Technical Analysis

Technical Analysis Sentiment
Negative
Last Price80.01
Price Trends
50DMA
83.71
Negative
100DMA
90.71
Negative
200DMA
92.01
Negative
Market Momentum
MACD
-0.62
Negative
RSI
40.27
Neutral
STOCH
30.43
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OMC, the sentiment is Negative. The current price of 80.01 is below the 20-day moving average (MA) of 82.07, below the 50-day MA of 83.71, and below the 200-day MA of 92.01, indicating a bearish trend. The MACD of -0.62 indicates Negative momentum. The RSI at 40.27 is Neutral, neither overbought nor oversold. The STOCH value of 30.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OMC.

Omnicom Group Risk Analysis

Omnicom Group disclosed 28 risk factors in its most recent earnings report. Omnicom Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Omnicom Group Peers Comparison

Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
OMOMC
76
Outperform
$16.21B11.4737.92%3.39%6.79%7.79%
73
Outperform
$25.73B14.3316.11%2.54%8.35%26.60%
IPIPG
70
Outperform
$10.18B15.4417.82%4.83%-1.81%-35.74%
WPWPP
63
Neutral
$8.82B12.7216.04%6.16%4.34%-59.80%
59
Neutral
$29.20B0.14-12.92%4.06%2.18%-51.74%
48
Neutral
$443.97M-14.59%6.28%-9.09%-356.14%
HHHHS
45
Neutral
$35.93M-143.62%-4.66%-229.79%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
OMC
Omnicom Group
80.01
-12.77
-13.76%
ACCO
ACCO Brands
4.75
-0.36
-7.05%
HHS
Harte-Hanks
5.18
-2.40
-31.66%
IPG
Interpublic Group of Companies
26.35
-5.27
-16.67%
WPP
WPP
40.83
-2.53
-5.83%
PUBGY
Publicis Groupe SA
25.24
-0.48
-1.87%

Omnicom Group Earnings Call Summary

Earnings Call Date: Feb 4, 2025 | % Change Since: -7.17% | Next Earnings Date: Apr 22, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Omnicom's strong performance in 2024, with significant growth in organic revenues, new business wins, and industry recognition. However, challenges were noted in the healthcare and branding sectors, along with a negative impact from foreign currency translation. Overall, the sentiment is positive, driven by the achievements and strategic initiatives announced.
Highlights
Strong Organic Growth
Omnicom reported an organic growth of 5.2% for both the fourth quarter and full year 2024, exceeding the high end of their guidance.
Significant New Business Wins
Omnicom secured over $7 billion in new business, including major wins from Amazon, Unilever, and HP.
Media Group Achievements
Omnicom Media Group had the highest billing growth rate among all media groups in 2024 and ranked first in client retention rate.
Acquisition and Strategic Initiatives
Omnicom expanded its capabilities with the acquisition of Flywheel and the formation of Omnicom Production and Omnicom Advertising Group.
Industry Recognitions and Awards
TBWA was named Adweek's 2024 Global Agency of the Year, and Omnicom was named Holding Company of the Year by MediaPost for the second year in a row.
Strong Free Cash Flow and Shareholder Returns
Omnicom generated almost $2 billion in free cash flow and returned over $900 million to shareholders through dividends and share repurchases.
Lowlights
Healthcare Revenue Decline
Healthcare revenues were down 4% for the quarter, impacted by a significant client loss.
Branding and Retail Commerce Challenges
Branding and Retail Commerce declined by 12% due to reduced client spending and lower performance in retail commerce.
Foreign Currency Impact
The impact of foreign currency translation reduced revenue by 0.6% for the quarter and is expected to reduce revenue by 2% to 2.5% for Q1 2025.
Company Guidance
During Omnicom's fourth quarter and full year 2024 earnings call, the company reported strong financial performance, featuring an organic growth rate of 5.2% for both the quarter and the full year, exceeding the high end of their guidance. They achieved an adjusted EBITA margin of 16.7% for the fourth quarter and 15.5% for the full year, meeting their targets. The adjusted diluted earnings per share for the quarter rose by 6.6% to $2.41, compared to the same period in 2023. Omnicom generated nearly $2 billion in free cash flow, and returned over $900 million to shareholders through dividends and share repurchases. Looking ahead to 2025, Omnicom expects organic growth between 3.5% and 4.5% and aims to improve adjusted EBITA margins by 10 basis points. The company also discussed the potential synergies and revenue growth from their proposed acquisition of Interpublic, projecting $750 million in run-rate cost savings and emphasizing opportunities for increased service offerings and innovation post-acquisition.

Omnicom Group Corporate Events

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Omnicom Group Reports Strong 2024 Financial Results
Positive
Feb 4, 2025

On February 4, 2025, Omnicom Group announced its financial results for the fourth quarter and full year ending December 31, 2024. The company reported a revenue of $4.3 billion for the fourth quarter and $15.7 billion for the full year, both reflecting a 5.2% organic growth. With a net income of $448 million in the fourth quarter and $1,480.6 million for the full year, Omnicom’s strong operational execution has positioned it well for future growth. The company is optimistic about its proposed acquisition of Interpublic, which is expected to enhance its market offering by combining business and cultural strengths, potentially resulting in significant revenue and cost synergies.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.