Shares of Omnicom Group Inc. (OMC) scaled a new 52-week high of $77.43 during yesterday’s trading session, before closing a notch lower at $77.21. Omnicom’s share prices have been on an uptrend since it reported impressive third-quarter 2014 earnings results in October this year. Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock still has the wherewithal to further drive its price upward. The stock is currently trading at a forward P/E of 18.3x and has long-term earnings growth expectation of 7.5%.
Growth Drivers
Omnicom reported third-quarter 2014 GAAP net income of $239.5 million or 95 cents per share versus $191.2 million or 74 cents in the year-ago quarter. The healthy year-over-year increase in earnings was primarily attributable to decent top-line growth. Reported earnings beat the Zacks Consensus Estimate by 4 cents.
Quarterly revenues rose 7.4% year over year to $3,749.6 million, well exceeding the Zacks Consensus Estimate of $3,687 million. From a geographical perspective, domestic revenues improved 10% over the prior-year period to $1,996.3 million. International revenues increased 4.7% year over year to $1,753.3 million.
Omnicom is experiencing continuous revenue growth, driven by healthy performance in developed markets like the U.S. and developing markets like Asia and Latin America. The measures undertaken by the company to reduce costs have also helped it to boost earnings. The company is expanding its global footprint and is moving into new service areas. It is also building upon its digital and analytical capabilities by investing in agencies and partnering with innovative technology companies in key markets. In addition, Omnicom’s operations are diversified across technology platforms, thus lowering its dependence on any one product in these dynamic technological markets and reducing the volatility of its earnings.
Other Stocks to Consider
Other players in the industry worth mentioning include Coupons.com Incorporated (COUP), Hipcricket, Inc. (HIPP), and TubeMogul, Inc. (TUBE), each carrying a Zacks Rank #2 (Buy).
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