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Omnicom Group Inc OMC

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Morningstar’s Analysis

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Economic Moat




Omnicom Beat Q3 Expectations, but Economic and Q4 Uncertainties Remain; Maintaining $79 FVE

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Omnicom reported a better-than-expected third quarter on both the top and bottom line as the year-over-year decline in demand from marketers improved a bit from the second quarter. As was the case with other ad holding companies and digital platforms like Snap, Omnicom clients are showing more interest in direct response ads than brand ones, for the time being. In addition, many are accelerating their digital transformation plans, to which Omnicom has responded well. The firm did not provide fourth-quarter guidance due to the ongoing uncertainty related to the COVID-19 pandemic. We slightly adjusted our model to account for the slightly higher third-quarter revenue but are maintaining our $79 fair value estimate. We continue to view this narrow-moat name favorably for long-term investors.

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Company Profile

Business Description

Omnicom is the world's second- largest ad holding company, based on annual revenue. The American firm's services, which include traditional and digital advertising and public relations, are provided worldwide, with over 85% of its revenue coming from more developed regions such as North America and Europe.

437 Madison Avenue
New York, NY, 10022
T +1 212 415-3600
Sector Communication Services
Industry Advertising Agencies
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 70,000