Omnicom Tops Forecasts Despite Failed Publicis Merger

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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 ( OMC ) 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 ( AAPL ),Johnson & Johnson ( JNJ ) andMcDonald's ( MCD ). 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.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: OMC , AAPL , JNJ , MCD

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