What's in the Cards for Omnicom (OMC) This Earnings Season?

Omnicom Group Inc.’s OMC shares have lost 35.9% year to date compared with  41% decline of the industry it belongs to. Analysts expect the company’s first-quarter 2020 earnings to increase while revenues may suffer a year-over-year decrease.

Let’s delve deeper.

Revenues Likely to Decrease

The top-line result is expected to reflect the impact of lower acquisition revenues, net of disposition revenues, and unfavorable currency movements. The Zacks Consensus Estimate for the company's first-quarter revenues is pegged at $3.4 billion, suggesting a 2.4% decline from the year-ago reported figure. The consensus estimate for total organic revenue growth indicates a 12% fall from the prior-year reported number.

In fourth-quarter 2019, total revenues of $4.1 billion inched up 1.3% year over year. This upside was driven by 3.5% organic revenue growth, partially offset by a 0.9% foreign exchange headwind and softness in acquisition revenues, net of disposition revenues of 1.2%.

Omnicom Group Inc. Price and EPS Surprise

Omnicom Group Inc. Price and EPS Surprise

Omnicom Group Inc. price-eps-surprise | Omnicom Group Inc. Quote

Earnings Likely to Increase

The bottom line is expected to have benefited from the change in business mix, resulting from the disposition of several non-strategic or underperforming agencies over the past year. The Zacks Consensus Estimate for earnings is pegged at $1.23, implying an increase of 5.1% from the year-earlier reported figure. Also, operational efficiency efforts through investments in real estate, back-office services, procurement and IT are expected to reflect on the company’s bottom line.

In fourth-quarter 2019, adjusted earnings of $1.89 per share increased 6.8% on a year-over-year basis.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for Omnicom this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Omnicom has an Earnings ESP of -2.04% as the Most Accurate Estimate is pegged at $1.20 per share, lower than the Zacks Consensus Estimate of $1.23. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Omnicom carries a Zacks Rank #4(Sell), currently.

Stocks to Consider

Here are a few stocks from the broader Zacks Business Services sector that investors may consider as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Verisk Analytics, Inc. VRSK has an Earnings ESP of +2.43% and a Zacks Rank #3.

Spotify Technology S.A. SPOT has an Earnings ESP of +21.70% and a Zacks Rank of 3.

Advanced Disposal Services, Inc. ADSW has an Earnings ESP of +16.67% and is Zacks #3 Ranked.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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Omnicom Group Inc. (OMC) : Free Stock Analysis Report
 
Verisk Analytics, Inc. (VRSK) : Free Stock Analysis Report
 
Advanced Disposal Services Inc. (ADSW) : Free Stock Analysis Report
 
Spotify Technology SA (SPOT) : Free Stock Analysis Report
 
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