Omnicom Group (OMC) AI Stock Analysis

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Omnicom Group

(NYSE:OMC)

Rating:69Neutral

Price Target:―

Omnicom Group's overall stock score reflects its strong financial performance and reasonable valuation, supported by a solid dividend yield. The strategic initiatives and acquisition plans provide growth potential. However, the bearish technical indicators and challenges in specific sectors present risks. Continued monitoring of leverage and market conditions is advisable.

Positive Factors

Acquisition

Omnicom's acquisition of Interpublic creates the new number-one global ad holding company.

Financial Performance

2025 EBITA margins are seen expanding 10bp and share repurchases should increase back to $600m, from $370m in 2024.

Negative Factors

Integration Risk

Integration risk is real in terms of client, staff, and IT friction.

Revenue Growth

The initial 2025 outlook fell a bit short of expectations.

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

Market Cap

$14.27B

Dividend Yield3.81%

Average Volume (3M)2.70M

Price to Earnings (P/E)10.0

Beta (1Y)0.78

Revenue Growth5.84%

EPS Growth-1.17%

CountryUS

Employees74,900

SectorCommunication Services

Sector Strength86

IndustryAdvertising Agencies

Share Statistics

EPS (TTM)1.70

Shares Outstanding195,109,400

10 Day Avg. Volume1,976,356

30 Day Avg. Volume2,697,528

Financial Highlights & Ratios

PEG Ratio-5.25

Price to Book (P/B)3.47

Price to Sales (P/S)0.00

P/FCF Ratio10.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$94.29

Price Target Upside28.93% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering8

Omnicom Group Business Overview & Revenue Model

Company DescriptionOmnicom Group Inc., together with its subsidiaries, provides advertising, marketing, and corporate communications services. It provides a range of services in the areas of advertising, customer relationship management, public relations, and healthcare. The company's services include advertising, branding, content marketing, corporate social responsibility consulting, crisis communications, custom publishing, data analytics, database management, digital/direct marketing, digital transformation, entertainment marketing, experiential marketing, field marketing, financial/corporate business-to-business advertising, graphic arts/digital imaging, healthcare marketing and communications, and in-store design services. Its services also comprise interactive marketing, investor relations, marketing research, media planning and buying, merchandising and point of sale, mobile marketing, multi-cultural marketing, non-profit marketing, organizational communications, package design, product placement, promotional marketing, public affairs, retail marketing, sales support, search engine marketing, shopper marketing, social media marketing, and sports and event marketing services. It operates in the United States, Canada, Puerto Rico, South America, Mexico, Europe, the Middle East, Africa, Australia, Greater China, India, Japan, Korea, New Zealand, Singapore, and other Asian countries. The company was incorporated in 1944 and is based in New York, New York.

How the Company Makes MoneyOmnicom Group generates revenue through a variety of services offered to its clients, primarily in the advertising and marketing communications fields. The company's key revenue streams include fees from advertising services, media planning and buying, digital and interactive marketing, direct and promotional marketing, and public relations services. Omnicom works with a wide array of clients across different sectors, billing them for customized campaigns and strategic marketing solutions. Additionally, partnerships with major media companies and platforms, as well as strategic acquisitions of specialized agencies, contribute to its revenue by expanding its service offerings and client base.

Omnicom Group Financial Statement Overview

Summary

Omnicom Group exhibits solid financial health with strong profitability, efficient cash flow management, and stable growth. The company's high return on equity and consistent revenue increase highlight its competitive advantage, although moderate leverage suggests some risk.

Income Statement

Very Positive

Omnicom Group shows healthy profitability with a consistent gross profit margin around 18.6% and a net profit margin of approximately 9.2% in TTM. The EBIT and EBITDA margins are stable at 14.6% and 16.7%, respectively. Revenue growth has been positive, with a notable increase from 2023 to TTM, indicating good performance in a competitive industry.

Balance Sheet

Positive

The company maintains a reasonable debt-to-equity ratio of 1.58, indicating moderate leverage. The return on equity is strong at 33.1%, reflecting efficient use of shareholder funds. However, the equity ratio of 15.5% suggests a reliance on liabilities for financing, which could present risks.

Cash Flow

Very Positive

Omnicom Group demonstrates robust cash flow performance, with a free cash flow growth rate of 5.5% from 2023 to TTM. The operating cash flow to net income ratio of 1.08 reflects efficient cash conversion, and the free cash flow to net income ratio of 0.98 indicates solid cash generation relative to profits.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
15.75B	15.69B	14.69B	14.29B	14.29B	13.17B
	Gross Profit
2.93B	2.92B	2.71B	2.68B	2.79B	2.18B
	EBIT
2.31B	2.27B	2.10B	2.08B	2.20B	1.60B
	EBITDA
2.63B	2.62B	2.42B	2.38B	2.32B	1.95B
	Net Income Common Stockholders
1.45B	1.48B	1.39B	1.30B	1.40B	951.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.38B	4.34B	4.43B	4.34B	5.32B	5.60B
	Total Assets
28.11B	29.62B	28.04B	27.00B	28.42B	27.65B
	Total Debt
6.93B	6.87B	6.50B	6.49B	6.65B	6.93B
	Net Debt
3.55B	2.53B	2.07B	2.21B	1.33B	1.32B
	Total Liabilities
22.75B	24.45B	23.40B	22.84B	24.65B	24.07B
	Stockholders Equity
4.37B	4.19B	3.62B	3.25B	3.27B	3.08B
Cash Flow		Free Cash Flow
1.42B	1.59B	1.34B	848.30M	1.28B	1.65B
	Operating Cash Flow
1.57B	1.73B	1.42B	926.50M	1.95B	1.72B
	Investing Cash Flow
-223.80M	-1.06B	79.10M	-380.90M	-709.20M	-136.10M
	Financing Cash Flow
-1.09B	-582.00M	-1.39B	-1.36B	-1.39B	-408.40M

Omnicom Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price73.13

Price Trends

50DMA

76.77

Negative

100DMA

80.24

Negative

200DMA

88.89

Negative

Market Momentum

MACD

-0.42

Positive

RSI

39.05

Neutral

STOCH

11.46

Positive

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 73.13 is below the 20-day moving average (MA) of 76.03, below the 50-day MA of 76.77, and below the 200-day MA of 88.89, indicating a bearish trend. The MACD of -0.42 indicates Positive momentum. The RSI at 39.05 is Neutral, neither overbought nor oversold. The STOCH value of 11.46 is Positive, 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 3 New Risks

The Merger may not be completed, and the Merger Agreement may be terminated in accordance with its terms. Q4, 2024

Failure to complete the Merger could negatively impact the price of shares of our common stock, as well as our business and results of operations. Q4, 2024

Uncertainties associated with the Merger may cause a loss of our and IPG's management personnel and other key employees, which could adversely affect the business and operations of the combined company following the Merger. Q4, 2024

Omnicom Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WPP	71 Outperform	$8.59B	12.43	16.04%	6.36%	2.07%	407.27%
CRTO	69 Neutral	$1.42B	10.80	13.46%	―	-1.18%	100.33%
OMC	69 Neutral	$14.27B	10.01	36.50%	3.81%	5.84%	-1.17%
ZD	68 Neutral	$1.30B	19.31	4.12%	―	3.24%	36.80%
STGW	63 Neutral	$1.27B	933.33	0.19%	―	9.86%	―
IPG	60 Neutral	$9.32B	19.27	13.33%	5.44%	-3.18%	-53.36%
Sector *	60 Neutral	$14.21B	6.47	-3.76%	3.69%	2.48%	-35.46%

* Communication Services Sector Average

Performance Comparison

OMC

Omnicom Group

73.13

-18.24

-19.96%

IPG

Interpublic Group of Companies

24.06

-6.00

-19.96%

Ziff Davis

30.89

-23.62

-43.33%

STGW

Stagwell

4.76

-2.26

-32.19%

WPP

39.96

-9.33

-18.93%

CRTO

Criteo SA

26.49

-10.97

-29.28%

Omnicom Group Earnings Call Summary

Earnings Call Date:Apr 15, 2025

(Q1-2025)

% Change Since: -4.82%|

Next Earnings Date:Jul 22, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture. While Omnicom reported strong organic revenue growth and made progress on strategic initiatives like AI integration and the Interpublic acquisition, it also faced challenges such as declines in specific sectors like public relations and healthcare, as well as negative impacts from foreign currency fluctuations. The company lowered its growth guidance due to macroeconomic uncertainties.

Q1-2025 Updates

Positive Updates

Organic Revenue Growth

Omnicom reported organic revenue growth of 3.4% in Q1 2025, in line with expectations, driven by strong growth in media and advertising and precision marketing disciplines.

Adjusted EBITDA Margin and Earnings

Adjusted EBITDA margin was 13.8%, and non-GAAP adjusted earnings per share increased by 1.8% to $1.70 compared to Q1 2024.

AI and Technology Integration

Omnicom's Omni AI platform is enhancing operations, creativity, and client outcomes, aiming to be on every client-facing employee's desktop by year-end.

Recognition and Awards

Omnicom was named a leader in Forrester Wave evaluations for media, commerce, and marketing creative and content services, with several agencies receiving accolades for their performance.

Interpublic Acquisition Progress

Progress made on the proposed acquisition of Interpublic, with shareholder and regulatory approvals underway. Expected to close in the second half of 2025.

Negative Updates

Challenges in Public Relations and Healthcare

Public relations revenue declined by 5% due to client delays, and healthcare revenue decreased by 3% due to delays and client product launch issues.

Branding and Retail Commerce Decline

Branding and retail commerce revenues were down 10%, impacted by uncertain market conditions and a slowdown in M&A activity.

Foreign Currency Impact

Foreign currency translation decreased reported revenue by 1.6% in Q1 2025, with expected continued negative impacts throughout the year.

Increased Net Interest Expense

Net interest expense increased by $2.6 million, primarily due to debt related to the Flywheel acquisition.

Lowered Guidance Range

The full-year 2025 organic growth guidance range was lowered to 2.5% to 4.5% due to economic uncertainties and potential impacts on client spending.

Company Guidance

During the Omnicom Group Inc.'s first quarter 2025 earnings call, John Wren, the CEO, reported organic revenue growth at 3.4%, aligning with expectations, primarily driven by media, advertising, and precision marketing. The adjusted EBITDA margin stood at 13.8%, and non-GAAP adjusted EPS increased to $1.70, up 1.8% from Q1 2024. The company maintained a strong financial position, supporting dividends, acquisitions, and share repurchases. Despite market volatility, Omnicom expanded its full-year organic growth guidance to 2.5%-4.5% and aimed for an adjusted EBITDA margin 10 basis points higher than 2024's 15.5%. Omnicom is progressing with its acquisition of Interpublic, anticipating $750 million in cost synergies and leveraging AI through its Omni AI platform to drive operational efficiencies and client outcomes. The company continues to focus on strategic technology investments and maintaining a diversified service portfolio to navigate potential economic uncertainties.

Omnicom Group Corporate Events

Executive/Board ChangesShareholder Meetings

Omnicom Group Holds Annual Shareholder Meeting Decisions

Neutral

May 9, 2025

On May 6, 2025, Omnicom Group Inc. held its annual meeting of shareholders where several key decisions were made. Shareholders elected 11 individuals to the Board of Directors, approved executive compensation, ratified KPMG LLP as independent auditors for the fiscal year ending December 31, 2025, and voted against a proposal for an independent Board chairman.

M&A TransactionsFinancial Disclosures

Omnicom Reports Q1 2025 Financial Results

Positive

Apr 15, 2025

On April 15, 2025, Omnicom announced its financial results for the first quarter of 2025, reporting a revenue of $3.7 billion and an organic growth of 3.4%. The company is optimistic about its upcoming merger with The Interpublic Group, expected to close in the second half of the year, which is anticipated to bring significant revenue growth and cost synergies, despite the challenging economic environment.

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.