Short Interest in Omnicom Group Inc. (NYSE:OMC) Rises By 77.8%

Key Points

• Short interest surged 77.8% in February to 46,725,132 shares (about 15.2% of shares sold short) with a days-to-cover ratio of 5.8.
• Omnicom missed quarterly estimates, reporting EPS of $2.59 versus $2.94 expected and revenue of $5.53 billion versus $7.58 billion, though revenue rose 27.9% year-over-year.
• The board authorized a $5.0 billion share buyback (up to ~38.1% of outstanding stock) and declared a $0.80 quarterly dividend (annualized $3.20, ~4.1% yield) despite a reported dividend payout ratio of 653%.

Omnicom Group Inc. (NYSE:OMC - Get Free Report) saw a large increase in short interest in the month of February. As of February 27th, there was short interest totaling 46,725,132 shares, an increase of 77.8% from the February 12th total of 26,283,358 shares. Based on an average daily volume of 8,084,294 shares, the days-to-cover ratio is presently 5.8 days. Currently, 15.2% of the shares of the company are sold short. Currently, 15.2% of the shares of the company are sold short. Based on an average daily volume of 8,084,294 shares, the days-to-cover ratio is presently 5.8 days.

Hedge Funds Weigh In On Omnicom Group

Several institutional investors and hedge funds have recently made changes to their positions in the company. Connor Clark & Lunn Investment Management Ltd. bought a new position in Omnicom Group during the 2nd quarter worth about $8,511,000. ProShare Advisors LLC grew its holdings in shares of Omnicom Group by 2.5% during the second quarter. ProShare Advisors LLC now owns 43,951 shares of the business services provider's stock worth $3,162,000 after buying an additional 1,084 shares in the last quarter. Allworth Financial LP grew its holdings in shares of Omnicom Group by 17.9% during the second quarter. Allworth Financial LP now owns 2,819 shares of the business services provider's stock worth $203,000 after buying an additional 428 shares in the last quarter. Vise Technologies Inc. acquired a new stake in Omnicom Group in the 2nd quarter valued at approximately $742,000. Finally, National Pension Service raised its position in Omnicom Group by 3.1% in the 2nd quarter. National Pension Service now owns 82,147 shares of the business services provider's stock valued at $5,910,000 after buying an additional 2,455 shares during the last quarter. Institutional investors and hedge funds own 91.97% of the company's stock.

Omnicom Group Price Performance

OMC traded up $0.38 during midday trading on Friday, hitting $78.29. The company had a trading volume of 2,368,248 shares, compared to its average volume of 4,972,892. Omnicom Group has a twelve month low of $66.33 and a twelve month high of $87.17. The company has a market capitalization of $24.30 billion, a PE ratio of 159.69, a P/E/G ratio of 0.78 and a beta of 0.71. The company has a debt-to-equity ratio of 0.60, a quick ratio of 0.81 and a current ratio of 0.93. The firm's 50-day simple moving average is $77.83 and its 200-day simple moving average is $77.13.

Omnicom Group (NYSE:OMC - Get Free Report) last released its earnings results on Wednesday, February 18th. The business services provider reported $2.59 earnings per share for the quarter, missing analysts' consensus estimates of $2.94 by ($0.35). Omnicom Group had a positive return on equity of 25.65% and a negative net margin of 0.32%.The firm had revenue of $5.53 billion for the quarter, compared to the consensus estimate of $7.58 billion. During the same quarter in the previous year, the firm earned $2.41 EPS. The company's revenue was up 27.9% compared to the same quarter last year. Equities research analysts predict that Omnicom Group will post 8.25 EPS for the current fiscal year.

Omnicom Group Announces Dividend

The company also recently declared a quarterly dividend, which will be paid on Thursday, April 9th. Investors of record on Wednesday, March 11th will be given a $0.80 dividend. This represents a $3.20 dividend on an annualized basis and a dividend yield of 4.1%. The ex-dividend date is Wednesday, March 11th. Omnicom Group's dividend payout ratio (DPR) is currently 653.06%.

Omnicom Group announced that its board has authorized a stock buyback program on Wednesday, February 18th that permits the company to repurchase $5.00 billion in outstanding shares. This repurchase authorization permits the business services provider to repurchase up to 38.1% of its stock through open market purchases. Stock repurchase programs are typically an indication that the company's board believes its stock is undervalued.

Analyst Upgrades and Downgrades

A number of equities analysts have commented on OMC shares. Bank of America restated an "underperform" rating and issued a $77.00 price target (down from $87.00) on shares of Omnicom Group in a research report on Monday, January 5th. Morgan Stanley initiated coverage on shares of Omnicom Group in a research note on Tuesday, December 16th. They issued an "equal weight" rating and a $88.00 target price for the company. Barclays boosted their target price on Omnicom Group from $82.00 to $90.00 and gave the stock an "equal weight" rating in a report on Monday, February 23rd. UBS Group increased their price target on Omnicom Group from $99.00 to $108.00 and gave the stock a "buy" rating in a research report on Friday, December 5th. Finally, Citigroup lifted their price objective on Omnicom Group from $103.00 to $115.00 and gave the company a "buy" rating in a research report on Friday, February 20th. Four equities research analysts have rated the stock with a Buy rating, three have assigned a Hold rating and one has assigned a Sell rating to the company. According to MarketBeat.com, the stock currently has a consensus rating of "Hold" and a consensus price target of $95.00.

Omnicom Group Company Profile

Omnicom Group Inc NYSE: OMC is a global marketing and corporate communications holding company headquartered in New York City. Founded in 1986 through the merger of the BBDO, DDB and Needham Harper agencies, Omnicom has built a portfolio of leading brands and networks serving clients across diverse industries.

The company's primary business activities encompass advertising, strategic media planning and buying, digital and interactive marketing, direct and promotional marketing, public relations, and customer relationship management.

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