Omnicom Group (OMC)

Global advertising giant Omnicom Group (NYSE:OMC) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 4% year on year to $4.04 billion. Its non-GAAP profit of $2.24 per share was 3.1% above analysts’ consensus estimates.

Company Overview

With a vast network of creative agencies that helped craft some of the most memorable ad campaigns in history, Omnicom Group (NYSE:OMC) is a strategic holding company that provides advertising, marketing, and communications services to many of the world's largest companies.

The sector is on the precipice of both disruption and growth as AI, programmatic advertising, and data-driven marketing reshape how things are done. For example, the advent of the Internet broadly and programmatic advertising specifically means that brand building is not a relationship business anymore but instead one based on data and technology, which could hurt traditional ad agencies. On the other hand, the companies in the sector that beef up their tech chops by automating the buying of ad inventory or facilitating omnichannel marketing, for example, stand to benefit. With or without advances in digitization and AI, the sector is still highly levered to the macro, and economic uncertainty may lead to fluctuating ad spend, particularly in cyclical industries.

Omnicom's main competitors include other major advertising holding companies such as WPP (NYSE:WPP), Publicis Groupe (OTCMKTS:PUBGY), Interpublic Group (NYSE:IPG), and Dentsu Group (OTCMKTS:DNTUY). The company also increasingly competes with consulting firms like Accenture (NYSE:ACN) that have expanded into marketing services, as well as digital platforms that offer advertising solutions.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $16.07 billion in revenue over the past 12 months, Omnicom Group is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. For Omnicom Group to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.

As you can see below, Omnicom Group grew its sales at a tepid 3.5% compounded annual growth rate over the last five years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Omnicom Group’s annualized revenue growth of 5.3% over the last two years is above its five-year trend, suggesting some bright spots.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Omnicom Group’s organic revenue averaged 4.3% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Omnicom Group grew its revenue by 4% year on year, and its $4.04 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 24% over the next 12 months, an improvement versus the last two years. This projection is eye-popping for a company of its scale and suggests its newer products and services will spur better top-line performance.

Omnicom Group has been an efficient company over the last five years. It was one of the more profitable businesses in the business services sector, boasting an average operating margin of 14.4%.

Looking at the trend in its profitability, Omnicom Group’s operating margin decreased by 2.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Omnicom Group generated an operating margin profit margin of 13.1%, down 2.3 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Omnicom Group’s EPS grew at a solid 10% compounded annual growth rate over the last five years, higher than its 3.5% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

Diving into the nuances of Omnicom Group’s earnings can give us a better understanding of its performance. A five-year view shows that Omnicom Group has repurchased its stock, shrinking its share count by 9.7%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Omnicom Group, its two-year annual EPS growth of 7.1% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Omnicom Group reported adjusted EPS of $2.24, up from $2.03 in the same quarter last year. This print beat analysts’ estimates by 3.1%. Over the next 12 months, Wall Street expects Omnicom Group’s full-year EPS of $8.40 to grow 7.6%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Omnicom Group has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 9.6% over the last five years, quite impressive for a business services business.

Taking a step back, we can see that Omnicom Group’s margin dropped by 8.8 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although Omnicom Group hasn’t been the highest-quality company lately, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 33.2%, splendid for a business services business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Omnicom Group’s ROIC has decreased over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Omnicom Group reported $3.41 billion of cash and $7.81 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $2.54 billion of EBITDA over the last 12 months, we view Omnicom Group’s 1.7× net-debt-to-EBITDA ratio as safe. We also see its $101.1 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Omnicom Group beat analysts’ EPS expectations this quarter. On the other hand, organic revenue growth missed slightly, leading to in line reported revenue. Zooming out, we think this was a mixed quarter. The stock remained flat at $78.00 immediately following the results.

Updated: December 4, 2025 at 11:06 PM EST

Before investing in or passing on Omnicom Group, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Omnicom Group isn’t a terrible business, but it isn’t one of our picks. First off, its revenue growth was uninspiring over the last five years. And while its scale makes it a trusted partner with negotiating leverage, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its cash profitability fell over the last five years.

Omnicom Group’s P/E ratio based on the next 12 months is 7.8x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $100.56 on the company (compared to the current share price of $70.28).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.