April 12, 2024
Investors

Here’s Why Omnicom Group (NYSE:OMC) Has Caught The Eye Of Investors


It’s common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

In contrast to all that, many investors prefer to focus on companies like Omnicom Group (NYSE:OMC), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Omnicom Group with the means to add long-term value to shareholders.

See our latest analysis for Omnicom Group

How Fast Is Omnicom Group Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Omnicom Group managed to grow EPS by 17% per year, over three years. That’s a pretty good rate, if the company can sustain it.

It’s often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company’s growth. It seems Omnicom Group is pretty stable, since revenue and EBIT margins are pretty flat year on year. While this doesn’t ring alarm bells, it may not meet the expectations of growth-minded investors.

You can take a look at the company’s revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

NYSE:OMC Earnings and Revenue History January 13th 2024

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Omnicom Group’s forecast profits?

Are Omnicom Group Insiders Aligned With All Shareholders?

Owing to the size of Omnicom Group, we wouldn’t expect insiders to hold a significant proportion of the company. But we are reassured by the fact they have invested in the company. Notably, they have an enviable stake in the company, worth US$173m. We note that this amounts to 1.0% of the company, which may be small owing to the sheer size of Omnicom Group but it’s still worth mentioning. This should still be a great incentive for management to maximise shareholder value.

Should You Add Omnicom Group To Your Watchlist?

One important encouraging feature of Omnicom Group is that it is growing profits. For those who are looking for a little more than this, the high level of insider ownership enhances our enthusiasm for this growth. These two factors are a huge highlight for the company which should be a strong contender your watchlists. What about risks? Every company has them, and we’ve spotted 1 warning sign for Omnicom Group you should know about.

Although Omnicom Group certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of companies that not only boast of strong growth but have also seen recent insider buying..

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we’re helping make it simple.

Find out whether Omnicom Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *