Earnings Preview: Omnicom Group - Analyst Blog
February 10 2012 - 9:00AM
Zacks
Omnicom Group Inc.
(OMC) will report its
fourth-quarter and FY11 earnings on Tuesday, February 14, 2012.
The current Zacks Consensus
Estimate for earnings per share (EPS) is 95 cents, representing an
annualized growth rate of 13.99%.
With respect to earnings surprises,
over the trailing four quarters, OMC outperformed the Zacks
Consensus Estimate in all the quarters. The average earnings
surprise was 6.66%, implying that the company outperformed the
Zacks Consensus Estimate by the same magnitude over the last four
quarters.
Third-Quarter
Highlights
On October 18, Omnicom Group posted
decent operating results for the third quarter of 2011.
Omnicom’s net income in the quarter
grew 16.7% year over year to $203.7 million from $174.6 million in
the third quarter of 2010. Earnings per share (EPS) expanded by
26.3% from 57 cents in the year-ago quarter to 72 cents in the
reported quarter. EPS also beats the Zacks Consensus Estimate of 70
cents.
Total revenue was $3,380.9 million,
up 12.9% year over year from $2,994.6 million in the corresponding
quarter of the previous year. Revenue surpassed the Zacks Consensus
Estimate of $3,293.0 million. Domestic and International revenue
rose 5.3% and 21.8% to reach $1,703.2 million and $1,677.7 million,
respectively.
Agreement of Estimate
Revisions
In the last 30 days, one analyst
increased the company’s earnings per share (EPS) estimate for the
fourth quarter of 2011 while three analysts decreased the same for
the quarter. However, for fiscal 2011, one analyst raised its
estimate while two decreased the same. For fiscal 2012, two
analysts increased estimate in the last 30 days, while 3 decreased
the same.
Magnitude of Estimate
Revisions
Estimates over the last 30 days
remained static at 95 cents for the fourth quarter of 2011,
representing a year-over-year growth of 13.99%.
Estimate for fiscal 2011 remained
static at $3.30 over the last 30 days. For fiscal 2012, the average
remained static at $3.65, as the positive and negative movements of
the analyst estimates had an offsetting effect on each other over
the last 30 days. These estimates represented a year-over-year
growth of 22.35% for 2011 and 10.42% for 2012.
Recently, Omnicom Group Inc.
announced the increase of the company's quarterly cash dividend by
20%, raising it from 25 cents to 30 cents per outstanding share of
the company’s common stock.
The company’s board has declared a
dividend of 30 cents per share, which is payable on April 2, 2012
to Omnicom Group common shareholders of record at the close of
business as of March 5, 2012.
Our Take
Omnicom is likely to foresee
revenue growth, on the backdrop of improving US and international
ad market, fueled by rising consumer spending. Moreover, the
company’s customized, cost effective business mix alongside
acquisitions and client base expansion appear favorable.
Omnicom is one of the largest
advertising, marketing and corporate communications companies in
the world extending customized mix of traditional media
advertising; customer relationship management (CRM), public
relations (PR), and specialty communications services in all the
major markets across the globe. It directly competes with its
peers, such as The Interpublic Group of Companies
Inc. (IPG), Publicis Groupe SA (PUBGY.PK)
and WPP plc (WPPGY).
We currently maintain a long-term
Neutral recommendation on the stock. The company has a Zacks #3
Rank, which translates into a short-term Hold rating (1-3
months).
INTERPUBLIC GRP (IPG): Free Stock Analysis Report
OMNICOM GRP (OMC): Free Stock Analysis Report
PUBLICIS GP-ADR (PUBGY): Free Stock Analysis Report
WPP GRP PLC (WPPGY): Free Stock Analysis Report
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