Should Value Investors Buy Omnicom (OMC) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Omnicom (OMC) is a stock many investors are watching right now. OMC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Investors should also recognize that OMC has a P/B ratio of 5.72. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 13.04. Over the past 12 months, OMC's P/B has been as high as 6.23 and as low as 5.16, with a median of 5.62.
Finally, investors will want to recognize that OMC has a P/CF ratio of 11.04. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. OMC's P/CF compares to its industry's average P/CF of 12.97. Over the past year, OMC's P/CF has been as high as 12.13 and as low as 10.24, with a median of 11.24.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Omnicom is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, OMC feels like a great value stock at the moment.
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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.