Omnicom (OMC) Down 5.8% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Omnicom (OMC). Shares have lost about 5.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Omnicom due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Omnicom Surpasses Q1 Earnings Estimates

Omnicom Group reported solid first-quarter 2020 results, wherein the company’s earnings and revenues surpassed the respective Zacks Consensus Estimate.

Adjusted earnings of $1.19 per share beat the consensus mark by 7.21% and increased 1.7% on a year-over-year basis.

Total revenues of $3.4 billion beat the consensus estimate by 0.6% but decreased 1.8% year over year on a reported basis. This year-over-year decrease came in due to a negative foreign-exchange rate impact of 1.4% and a decline in acquisition revenues, net of disposition revenues of 0.7%, partially offset by organic revenue growth of 0.3%.

Other Quarterly Details

Across fundamental disciplines, advertising edged down 0.1%, CRM Consumer Experience was down 1.3%, CRM Execution & Support declined 0.9%, Public Relations inched up 0.2% and Healthcare increased 9.6%, organically, year over year.

Across regional markets, year-over-year organic growth was 1.7% in the United States, 3.7% in the United Kingdom, 2% in the Asia Pacific and 0.6% in the Other North America. The Euro Markets & Other Europe, Latin America and Middle East and Africa were down 2.3%, 5% and 28.4%, respectively.

Operating profit in the first quarter came in at $420.2 million, down 2% year over year. Operating margin decreased to 12.3% from the year-ago quarter’s 12.4%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -33.33% due to these changes.

VGM Scores

At this time, Omnicom has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Omnicom has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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