Despite worries about Omnicom Group's second-quarter results
after its $35 billion merger deal with France's Publicis fell
through in May, the U.S. advertising and publicity giant managed
to top sales and profit forecasts.
Last week,Omnicom Group (
) reported Q2 earnings that rose 10% to $1.20 a share excluding
items, on a 6% increase in revenue, to $3.87 billion. The rise
marked a second straight quarter of accelerating profit gains and
the highest sales growth since Q4 2011.
Omnicom cited higher advertising spending by North American
clients, which includeApple (
),Johnson & Johnson (
) andMcDonald's (
). North America led with 7.9% organic revenue growth, followed
by a 7.8% gain in Latin America and 5.1% in Asia Pacific.
Results contrasted sharply with Publicis, which reported lower
profit and revenue during the quarter amid weakness in Europe and
emerging markets, as well as fallout from the failed merger.
Omnicom provides advertising, public relations and
communications services. Its global ad agencies include BBDO
Worldwide and DDB Worldwide; Ketchum and FleishmanHillard are
among its public relations outfits.
Omnicom gets a 1 for its three-year Earnings Stability Factor,
which ranges from 0 (most stable) to 99 (most volatile). Its
annual profit growth rate for the same period is 9%, and analysts
expect gains to continue at 8% this year and 11% the next.
Omnicom declared a Q2 dividend of 50 cents a share, or $2.00
for the full year -- an annualized yield of 2.7%, above the
S&P 500's 1.89% payout. The company has raised its quarterly
dividend each year since 2009.
The stock is trading back below a 73.77 saucer-with-handle buy
point, which it climbed past Friday in above-average volume. It
rose 8% after breaking out of a cup base in November, so the
current pattern is still first-stage.
Omnicom's sector, Commercial Services-Advertising, has been
lagging. It ranked No. 179 out of 197 groups in Monday's issue,
down five spots from six weeks ago.