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Omnicom Group Inc. (NYSE:OMC) will report its third-quarter 2011 earnings on Tuesday, October 18, 2011.

The current Zacks Consensus Estimate for earnings per share is 70 cents, representing an annualized growth rate of 22.51%.

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 7.92%, implying that the company outperformed the Zacks Consensus Estimate by the same magnitude over the last four quarters.

Second-Quarter Highlights

On July 19,Omnicom Group Inc. posted decent operating results for the second quarter of 2011. Omnicom’s net income in the quarter grew 13.1% year over year to $275.1 million from $243.3 million in the second quarter of 2010. Earnings per share expanded by 21.5% from 79 cents in the year-ago quarter to 96 cents in the reported quarter. EPS also beats the Zacks Consensus Estimate of 92 cents.

Total revenue was $3,487.4 million, up 14.7% year over year from $3,041.2 million in the corresponding quarter of the previous year. Revenue surpassed the Zacks Consensus Estimate of $3,381.0 million. Domestic and International revenue rose 7.8% and 22.7% to reach $1,764.2 million and $1,723.2 million, respectively.

Agreement of Estimate Revisions

In the last 30 days, out of the 2 analysts providing estimates, both increased the company’s earnings per share estimates for the third quarter. One analyst decreased their EPS estimate for the third quarter, while 5 decreased the same for the next quarter. However, for fiscal 2011, no analyst increased its estimate while four decreased the same. For fiscal 2012, 5 analysts decreased estimate in the last 30 days.

Magnitude of Estimate Revisions

Estimates over the last 30 days remained static at 70 cents for the third quarter of 2011, representing a year-over-year growth of 22.51%.

Estimate for fiscal 2011 decreased marginally from $3.30 to $3.29 over the last 30 days while that for fiscal 2012 showed a similar trend decreasing from $3.73 to $3.67. These estimates represented a year-over-year growth of 21.98% for 2011 and 11.53% for 2012.

Our Take

Omnicom is likely to post impressive results for the third quarter based on the company’s customized, cost effective business mix acquisitions and expansion of client base along with acquisitions and client base expansion. Moreover, improving scenario of U.S. and international ad market driven by increased consumer spending appear favorable for the company.

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, public relations, 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. (NYSE:IPG), Publicis Groupe SA (OTCQX:PUBGY) and WPP plc (NASDAQ: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).

Source: Omnicom Group Earnings Preview