Advertising company, Omnicom Group Inc. (OMC) is scheduled to report its third quarter results on October 19, 2010. The current Zacks Consensus Estimate for the third quarter is 57 cents a share.

Second Quarter Summary

On July 20, Omnicom announced encouraging results for the second quarter of fiscal 2010. During the quarter, net income grew 4.2% year over year to $243.3 million from $233.4 million in the second quarter of fiscal 2009. EPS also stretched by $0.04 from $0.75 in the year-earlier quarter to $0.79 in the reported quarter. Reported EPS beat the Zacks Consensus Estimate of $0.77.

Total revenue was $3,041.2 million, representing an increase of 5.9% year over year from $2,870.7 million in the first quarter of previous year. The company recorded 6% organic growth. Domestic and International revenue rose 7.4% and 4.3% to reach $1,636.9 million and $1,404.3 million, respectively. The increase was attributable to the general business environment, which continues to stabilize and improve.

Third Quarter Outlook

Although, management did not provide any guidance for the third quarter, the Zacks Consensus Estimates for the third quarter EPS and revenues remain at 57 cents and $2,963 million, respectively.

The Zacks Consensus Estimate fell by only a penny in the last 7 days. For the third quarter of fiscal 2010, out of 12 analysts covering the stock, 3 analysts moved downward and 2 analysts moved upward.

With respect to earnings surprises, Omnicom had a positive track record in all the preceding four quarters. Thus, the average earnings surprise was a positive of 3.30% over the last four quarters, meaning that the company has beaten the Zacks Consensus Estimate by that measure.

Our Recommendation

Despite the challenging economic environment in fiscal 2009, Omnicom continued generating new business wins and has acquired complementary companies to expand its client base, around which its global business evolves. Improving economic conditions should benefit Omnicom as they help increase client spends.

However, the intensely competitive advertising environment is a hindrance. We reiterate our long-term Neutral recommendation on the stock. The stock also currently retains its short term Hold rating (Zacks #3 Rank).

 
OMNICOM GRP (OMC): Free Stock Analysis Report
 
Zacks Investment Research