Founded in 1944 and headquartered in New York, Omnicom Group Inc. (OMC) is a leading global advertising and marketing communications company providing a comprehensive range of services. It can be a long-term total return opportunity, especially given OMC’s long-term track record for increasing dividends, which raises the Overvalue price/yield area, outlines Kelley Wright, editor of IQ Trends.
Its services include advertising, precision marketing, public relations, healthcare, branding, retail commerce, experiential marketing, and more. OMC operates in over 70 countries, offering its services across North and Latin America, Europe, the Middle East, Africa, and the Asia-Pacific region.
The company's portfolio includes renowned networks such as BBDO, DDB, TBWA, Omnicom Media Group, and DAS Group of Companies, among others. Omnicom's strategic focus involves leveraging its proprietary data and analytics platforms, Annalect and Omni, to provide precision marketing and insights at scale.
The company is also committed to integrating AI technologies to enhance productivity and service delivery. Omnicom recently completed its acquisition of The Interpublic Group of Companies (IPG), which will expand its capabilities and client base.
The historically repetitive high dividend (Undervalue) yield is 3.6%. Based on the current dividend of $3.20, that equates to an $89 share price. Recently trading around $80 per share, the current yield was about 4%, which represents an 11% discount from its historically repetitive Undervalue area.
The historically repetitive low dividend (Overvalue) yield is 2.3%. Again, based on the current dividend of $3.20, that equates to $139 per share, which represents a theoretical 74% upside.
The ROIC (return on invested capital) is 13%. The FCFY (free cash flow yield) is 6%, and the P/EBV (price dividend by economic book value) is 0.7. Economic Earnings Per Share = $4.45 vs $6.78 reported (GAAP). The Economic Book Value = $111.85 per share.
Omnicom's acquisition of IPG is expected to unlock $750 million in synergies, enhancing growth in data, media, creativity, and technology. That will strengthen Omnicom's competitive position in a data-centric environment.
Recommended Action: Buy OMC.
