Omnicom Group Inc. (OMC) posted decent operating results for the second quarter of 2011 on July 19.
Omnicom’s net income in the quarter grew 13.1% year over year to $275.1 million from $243.3 million in the second quarter of 2010.
Earnings per share (EPS) expanded by 21.5% from 79 cents in the year-ago quarter to 96 cents in the reported quarter. EPS also beats the Zacks Consensus Estimate of 92 cents.
Total revenue was $3,487.4 million, up 14.7% year over year from $3,041.2 million in the corresponding quarter of the previous year. Revenue surpassed the Zacks Consensus Estimate of $3,381.0 million.
Domestic and International revenue rose 7.8% and 22.7% to reach $1,764.2 million and $1,723.2 million, respectively.
Operating expenses excluding amortization of intangibles increased to $2976.0 million, compared with $2609.4 million in the prior-year quarter. Operating income grew 17.5% to $488.1 million, which resulted in an operating margin of about 14%, up 30 basis points compared with the last year. EBITA increased 18.4% to $511.4 million and EBITA margin rose by 50 basis points to 14.7%.
Omnicom’s net interest expense was recorded at $27.6 million, up from $23.7 million in the comparable period of 2010.
Omnicom’s key growth strategy is the company’s strategic acquisitions and expansion of its client base. Moreover, improved economic conditions and increased consumer spending reflect positive indication of improved performance going forward.
Omnicom is one of the largest advertising, marketing and corporate communications companies in the world. It directly competes with peers The Interpublic Group of Companies Inc. (IPG), Publicis Groupe SA (PUBGY.PK) and WPP plc (WPPGY).
We currently maintain a long-term Neutral recommendation on the stock. Omnicom has a Zacks #3 Rank, which translates into a short-term Hold rating (1-3 months).
