Can Omnicom Group (OMC) Surprise This Earnings Season? - Analyst Blog

Omnicom Group Inc. OMC is set to report first-quarter 2014 results before the market opens on Apr 22, 2014. In the last-reported quarter, Omnicom delivered a positive earnings surprise of 2.50%. Let's see how things are shaping up for this quarter.

Factors to Consider This Quarter

Omnicom is concentrating on strengthening its business and expanding its client base globally through acquisition of complementary companies.

The rising demand for media services, fast growth of technologies and expansion of channels are likely to drive the company's growth and boost its top line, aided by growth in developed markets like the U.S. and developing markets like Asia and Latin America. However, Europe's unpredictable macroeconomic scenario might be a drag on the top line. The company's measures to streamline costs should aid in margin expansion, resulting in improved bottom line.

Omnicom's recent merger with Publicis Groupe SA (PUBGY), said to create the world's biggest advertising company, will enable the former to boost core earnings in the coming quarters as the combined company expands its geographical footprint. However, merger costs may weigh on earnings this quarter.

Earnings Whispers?
    
Our proven model does not conclusively show that Omnicom is likely to beat earnings this quarter as it does not have the right combination of two key ingredients. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: ESP or Expected Surprise Prediction, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.27%. This is because both the Most Accurate estimate stands at 80 cents while the Zacks Consensus Estimate is lower at 79 cents.

Zacks Rank: Omnicom carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement.

Other Stocks to Consider

Here are other companies in the Consumer Discretionary sector you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

MGM Resorts International MGM, with earnings ESP of +20.00% and a Zacks Rank #2 (Buy).

Summer Infant, Inc. SUMR, with earnings ESP of +100.00% and a Zacks Rank #2.

The Walt Disney Company DIS, with earnings ESP of +3.13% and a Zacks Rank #2.