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Omnicom Posts Solid Q3 Earnings on Higher Revenues - Analyst Blog

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Omnicom Group Inc ( OMC ) reported third-quarter 2014 GAAP net income of $239.5 million or 95 cents per share versus $191.2 million or 74 cents in the year-ago quarter. Reported earnings per share beat the Zacks Consensus Estimate of 91 cents. The robust results were driven by a rise in revenues.

Omnicom Group Inc - Earnings Surprise | FindTheBest

Revenues

Quarterly revenues rose 7.4% year over year to $3,749.6 million, exceeding the Zacks Consensus Estimate of $3,687 million. From a geographical perspective, domestic revenues improved 10% over the prior-year period to $1,996.3 million. International revenues increased 4.7% year over year to $1,753.3 million.

Higher revenues for the reported quarter were primarily driven by a 6.5% rise in organic growth. Acquisitions, net of dispositions led to a 0.5% increase in revenues and the impact of foreign exchange rates led to a 0.4% increase in revenues.

Non GAAP earnings before interest, taxes and amortization (EBITA) for the reported quarter improved 13.6% year over year to $460.5 million.

Quarterly Performance

Segment-wise, organic revenues for Advertising were up 12.5% year over year to $1,853.3 million; CRM (customer relationship management) organic revenues increased 1% year over year to $1,306.7 million; PR (public relations) organic revenues of $343.3 million exhibited a 2.5% year-over-year rise; and Specialty organic revenues of $246.3 million decreased 0.1% year over year.

Across regional markets, North America reported growth of 8.9% ($2124.4 million) in organic revenues. Latin America recorded an increase of 2.5% ($102.6 million), Asia Pacific recorded an increase of 4.4% ($405.3 million), while organic revenues for Europe and Africa Mid East increased 2.2% ($1,053.5 million) and 18.1% ($63.8 million), respectively.

Balance Sheet & Cash Flow

Omnicom generated free cash flow of $1125.0 million for nine months ended Sep, 2014, versus $1014.1 million in the prior-year period. The company had a total debt of $3,811 million as of Sep 30, 2014, compared with $4,054 million a year ago. Cash and short-term investments aggregated $850 million as of Sep 30, 2014, compared with $1,534 million a year ago.

Omnicom has a share buyback program in place, under which it repurchased shares worth $7.9 million in the third quarter of 2014. Omnicom has consistently distributed more than 100% of net income to shareholders through dividends and share repurchases. Omnicom achieved a 33.7% return on equity (ROE) for the twelve months ended Sep 30, 2014.

Moving Forward

Omnicom has a track record of strengthening its business and expanding its global client base through acquisition of complementary companies.

The market reacted positively as share prices went up in pre-market trading .

Omnicom currently has a Zacks Rank #3 (Hold). Other stocks that look promising include MDC Partners Inc ( MDCA ), and TubeMogul, Inc ( TUBE ) each sporting a Zacks Rank #1 (Strong Buy) and Clear Channel Outdoor Holdings Inc ( CCO ), carrying a Zacks Rank #2 (Buy).

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


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

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