Results: Omnicom Group Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

By
Simply Wall St
Published
October 29, 2020
NYSE:OMC

Omnicom Group Inc. (NYSE:OMC) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 5.2% to hit US$3.2b. Omnicom Group also reported a statutory profit of US$1.45, which was an impressive 33% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Omnicom Group

earnings-and-revenue-growth
NYSE:OMC Earnings and Revenue Growth October 29th 2020

Following last week's earnings report, Omnicom Group's eleven analysts are forecasting 2021 revenues to be US$13.7b, approximately in line with the last 12 months. Statutory earnings per share are predicted to bounce 23% to US$5.48. Before this earnings report, the analysts had been forecasting revenues of US$13.7b and earnings per share (EPS) of US$5.47 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$59.50. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Omnicom Group analyst has a price target of US$79.00 per share, while the most pessimistic values it at US$48.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Omnicom Group shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues next year. Historically, Omnicom Group's sales have shrunk approximately 1.3% annually over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 4.7% next year. Although Omnicom Group's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$59.50, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Omnicom Group going out to 2022, and you can see them free on our platform here..

Even so, be aware that Omnicom Group is showing 1 warning sign in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. 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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