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Omnicom's on Sale

The ad firm has some of the most acclaimed agencies in the business.

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 Omnicom Group’s (OMC) second-quarter numbers beat on the bottom line while coming in a bit short of expectations on revenue. While overall organic growth remained strong, we are now slightly more cautious about 2018 because of some weakness in North America during the quarter. Management continues to expect 2%-3% organic revenue growth this year. After slightly lowering our 2018 revenue estimate, we are maintaining our $85 fair value estimate. The stock fell in reaction to the results, and we think it is trading at an attractive level.

Omnicom reported total second-quarter revenue of $3.86 billion, up 1.8% year over year. The negative impact of the company’s continuing business dispositions was offset by a 2.1% foreign exchange tailwind and 2.0% year-over-year organic growth. As in the first quarter, the North America region experienced an organic decline because of weakness in Canada and continuing effects of client losses in the United States. In addition, further adoption of in-house programmatic advertising is putting some pressure on North American revenue, although management does expect this to lessen.

Ali Mogharabi does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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