Why Is Omnicom (OMC) Down 21.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Omnicom (OMC). Shares have lost about 21.1% 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 Q4 Earnings Estimates

Omnicomreported solid fourth-quarter 2019 results wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of $1.89 per share beat the consensus mark by 1% and increased 6.8% on a year-over-year basis.

Total revenues of $4.1 billion beat the consensus estimate by 1.5% and increased 1.3% year over year on a reported basis. The year-over-year increase was driven by organic revenue growth of 3.5%, partially offset by negative foreign exchange rate impact of 0.9% and a decline in acquisition revenues, net of disposition revenues of 1.2%.

Other Quarterly Details

Across fundamental disciplines, advertising increased 5.1%, CRM Consumer Experience was up 3.3%, CRM Execution & Support declined 6%, Public Relations declined 2.5% and Healthcare increased 12.9%, organically, year over year.

Across regional markets, year-over-year organic growth was 2.8% in the United States, 3.3% in the United Kingdom, 4.7% in the Euro Markets and Other Europe, 4.5% in Asia Pacific and 19.5% in Middle East and Africa. Other North America and Latin America were down 2.3% and 1.3%, respectively.

Operating profit in the quarter came in at $646.4 million, up 3.1% year over year. Operating margin increased to 15.6% from 15.3% in the year-ago quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Omnicom has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Omnicom has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.