Assessing Omnicom After Recent Media Wins and Data Driven Marketing Partnerships

• If you are wondering whether Omnicom Group at around $81 is a smart buy or simply fairly priced right now, you are not alone. That is exactly what we are going to unpack.
• The stock has climbed about 2.0% over the last week and 11.1% over the past month, even though it is still down 5.5% year to date and 3.8% over the last year, after 3 year and 5 year gains of 13.4% and 57.2% respectively.
• Recent headlines have focused on Omnicom winning new creative and media mandates from global brands and leaning further into data driven marketing partnerships. This supports the narrative that big advertisers still value its integrated offering. At the same time, the market is weighing long term shifts toward digital and AI powered ad solutions, which helps explain the cautious but improving sentiment around the shares.
• On our metrics, Omnicom scores a 5 out of 6 valuation score, suggesting it screens as undervalued on most checks. From here we will walk through those valuation methods in detail, before ending with a more nuanced way to think about what the stock is really worth.

Omnicom Group delivered -3.8% returns over the last year. See how this stacks up to the rest of the Media industry.

Approach 1: Omnicom Group Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model projects the cash Omnicom Group can generate in the future, then discounts those cash flows back into today’s dollars to estimate what the business is worth now.

Omnicom’s latest twelve month free cash flow stands at about $1.7 billion, providing a solid base of cash generation. Analysts expect this to climb steadily, with Simply Wall St combining analyst forecasts and modest growth assumptions to project free cash flow rising to roughly $2.6 billion in 2035. These projections follow a two stage Free Cash Flow to Equity framework that assumes stronger growth in the near term and more moderate gains further out.

When all those future cash flows are discounted back, the model arrives at an intrinsic value of about $164.52 per share, compared with a current share price around $81. That implies the stock is trading at roughly a 50.4% discount to its estimated fair value, suggesting the market is pricing Omnicom well below its projected cash generating power.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Omnicom Group is undervalued by 50.4%. Track this in your watchlist or portfolio, or discover 916 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Omnicom Group.

Approach 2: Omnicom Group Price vs Earnings

For a mature, consistently profitable business like Omnicom, the price to earnings ratio is a practical way to judge whether the market price makes sense, because it directly links what investors pay to the profits the company is generating today.

In general, companies with stronger growth prospects and lower perceived risk deserve a higher, or more generous, PE multiple, while slower growing or riskier businesses tend to trade on lower PE ratios. Omnicom currently trades on about 19.35x earnings, which sits above the broader Media industry average of roughly 16.20x but well below the 46.75x average of its listed peers, highlighting more conservative expectations than many comparable names.

Simply Wall St’s Fair Ratio framework estimates what PE multiple a company should trade on given its earnings growth profile, margins, industry, size and risk, rather than just copying whatever its peers trade at. For Omnicom, that Fair Ratio comes out at 21.82x, modestly higher than the current 19.35x. That gap suggests the market is still pricing Omnicom’s earnings a bit too cautiously, leaving room for upside if results and sentiment continue to improve.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Omnicom Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. This is a simple way to connect your view of Omnicom Group’s story with a concrete forecast and fair value estimate that lives inside Simply Wall St’s Community page and updates dynamically as new news or earnings arrive. It can help you decide when to buy or sell by comparing your Fair Value to the current market price, whether you see Omnicom as a high conviction, merger powered compounder closer to the bullish $115 target with strong revenue growth and durable margins, or as a more cautious, integration and disruption constrained business closer to the $78 bear case with slower growth and lower profitability. All of this is expressed as your own numbers for future revenue, earnings and margins that the platform turns into a live, data backed valuation.

Do you think there's more to the story for Omnicom Group? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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