Omnicom (OMC – Free Report) is gaining from its Advertising & Media segment, which is generating more than 50% of the top line. The Flywheel buyout is resulting in higher client acquisitions. Dividend-seeking investors might find OMC appealing. A robust liquidity position is an added advantage.
However, periodic competitive reviews by customers can lead to losing more customers. Reduction in investment in the technology and telecommunications segments can hurt the precision market segment.
OMC’s revenues are anticipated to increase 2.1% and 4.3% year over year in 2025 and 2026, respectively. Earnings are estimated to rise 2% in 2025 and 8.4% in 2026.
Factors That Auger Well for Omnicom’s Success
OMC’s presence across diverse segments of the advertising and marketing industry broadens its top line. Also, it equips the company with the flexibility and expertise required to navigate the dynamic landscape efficiently. In 2024, more than 54% of revenues were derived from the Advertising & Media segment, and we estimate the metric to be 56% in 2025.
In 2024, Omnicom acquired Flywheel for $845 million, which has been fully incorporated into OMC’s operations, leading to strong client wins and top-line growth. Flywheel’s capabilities in Precision Marketing and Commerce Cloud are now leveraged across the company’s client base, which is anticipated to drive a return on investment.
OMC has a consistent record of returning value to shareholders in the form of dividends and share repurchases. In 2024, Omnicom paid out dividends of $552.7 million and repurchased shares worth $370.7 million. In 2023, the company paid out dividends of $562.7 million and repurchased shares worth $570.8 million. In 2022, it paid out dividends of $581.1 million and repurchased shares worth $611.4 million. Consistent share repurchasing instills investors’ confidence, and dividends attract higher investments for the long term.
The company’s current ratio (a measure of liquidity) at the end of the fourth quarter of 2024 was pegged at 1, lower than the industry’s 1.04. However, the metric gained 5% from the year-ago quarter due to a surge in accounts receivable. A current ratio of more than 1 indicates effective short-term debt coverage ability.
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Risks Faced by Omnicom
OMC experiences fierce competition; therefore, it must adapt quickly, offer top-notch services across the globe and acquire more clients. Periodic competitive reviews by clients can lead to the company losing customers. Failing to stay competitive or retain clients can harm the top line.
Due to internal restructuring and a focus on cost savings, the technology and telecommunications segments have temporarily curtailed their expenditure. This is likely to cause some challenges or disruptions within the company’s precision marketing segment.
OMC’s Zacks Rank & Stocks to Consider
The company has a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks from the broader Zacks Business Services sector are SPX Technologies, Inc. (SPXC – Free Report) and WNS (Holdings) Limited (WNS – Free Report) , each currently carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SPX Technologies has a long-term earnings growth expectation of 18%. SPXC delivered a trailing four-quarter earnings surprise of 8%, on average.
WNS has a long-term earnings growth expectation of 7.2%. WNS delivered a trailing four-quarter earnings surprise of 6.1%, on average.
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