Premier global advertising and marketing communications
Omnicom Group Inc.
) reported relatively solid first quarter 2013 results with a net
income of $205.1 million or 76 cents per share compared to $204.6
million or 72 cents in the year-earlier quarter. The earnings for
the reported quarter marginally beat the Zacks Consensus Estimate
by a penny.
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Total revenue in the reported quarter climbed 2.8% to settle at
$3,398.9 million and beat the Zacks Consensus Estimate of $3,397
million. From a geographical perspective, domestic revenue
accounted for 52.7% of total revenue and rose 4.2% to reach
$1,791.6 million, while international revenue (representing the
remainder 47.3%) increased 1.2% year over year to $1,607.3
Earnings before interest, taxes and amortization (EBITA) for the
reported quarter improved 2.7% year over year to $397.1 million,
while operating income rose 2.5% to $371.7 million.
Based on disciplines, Advertising revenue grew 5.7% to $1,651.9
million in first quarter 2013; CRM (customer relationship
management) revenue decreased 1.3% year over year to $1,172.7
million; PR (public relations) revenue of $318.4 million was up
3.7% year over year; and Specialty revenue of $255.9 million was
Omnicom generated free cash flow of $302.1 million in the
reported quarter, down from $310.5 million in the prior-year
quarter. The company had a total debt of $4,458 million at
quarter-end, compared to 3,193 million in the year-ago period.
Cash and short-term investments aggregated $2,090 million at
quarter-end compared to $1,509 million in the prior year. Return
on equity (ROE) for twelve months ended Mar 31, 2013 was 29.6%
compared to 26.9% for the same period in the preceding year.
The company increased its dividend payout by 33.33% year over
year to a quarterly payment of 40 cents per share or $1.60 on an
annualized basis. The first quarter 2013 dividend is payable on
Apr 2 to shareholders of record as of Mar 5.
Omnicom also has a share repurchase program in place, under which
it repurchased shares worth $238.3 million in the reported
quarter. Omnicom has consistently returned significant cash to
its shareholders. From 2002 to quarter-to-date, Omnicom
distributed 100% of net income to shareholders through dividends
and share repurchases.
Omnicom has a strong track record of winning new clients and
receiving additional deals from the existing ones. The company's
business mix is well diversified geographically and benefits
largely from the growing markets. In addition, the company's
efforts in maintaining controlled expenses and strong global
reputation are commendable.
However, the company needs to be wary of stiff competition from
other players in the industry such as
AirMedia Group Inc.
Publicis Groupe SA
). Omnicom presently has a Zacks Rank #3 (Hold).