What happened
Shares of Omnicom Group (OMC 0.76%) were climbing today after the advertising giant delivered a strong fourth-quarter earnings report, easily beating estimates on both the top and bottom lines.
As of 2:50 p.m. ET on Wednesday, the stock was up 13.4%.
So what
Omnicom, which owns some of the biggest ad agencies in the world, including BBDO and DDB, said that organic revenue -- which strips out the impact of acquisitions, divestitures, and currency exchange -- was up 9.5% in the quarter to $3.86 billion, ahead of expectations at $3.68 billion. Revenue based on generally accepted accounting principles (GAAP) rose 2.6%, reflecting the sale of ICON International in June.
Image source: Getty Images.
Organic revenue increased in all seven of its business segments, including a 57% jump in experiential marketing due to the return of in-person events, and it was up in every region, showing the company's broad-based recovery from the pandemic.
Further down the income statement, operating margin was down slightly from 16.4% to 16.1%, and earnings per share ticked up from $1.84 to $1.95, outpacing the consensus at $1.73.
CEO John Wren said: "Our teams are working together in powerful new ways -- with leading technology and data solutions -- to deliver the best client outcomes in a rapidly evolving market. We are optimistic in our 2022 outlook and expect to continue to build on our long-term record of improving profitability and sustained value creation."
Now what
Looking ahead to 2022, the company sees organic revenue growth of 5% to 6%, and for margins to be in line with 2021, meaning investors should expect to see a 5% to 6% increase in EPS. The company is investing in new technologies and sees promising opportunities in areas like precision marketing as it leverages tools like artificial intelligence for its clients.
Operating in a mature industry, Omnicom is never going to be a fast grower, but the company is a reliable profit machine. At a price-to-earnings ratio of just 14, it looks like a good value, especially at a time of upheaval in the broader advertising industry.
