Waste Management (NYSE:WM) and Omnicom Group (NYSE:OMC) are both large-cap business services companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.
Profitability
This table compares Waste Management and Omnicom Group's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Waste Management | 10.66% | 25.84% | 6.54% |
| Omnicom Group | 7.10% | 36.90% | 4.68% |
Dividends
Waste Management pays an annual dividend of $2.30 per share and has a dividend yield of 1.7%. Omnicom Group pays an annual dividend of $2.80 per share and has a dividend yield of 3.5%. Waste Management pays out 52.3% of its earnings in the form of a dividend. Omnicom Group pays out 46.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Waste Management has increased its dividend for 1 consecutive years and Omnicom Group has increased its dividend for 1 consecutive years. Omnicom Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation and Earnings
This table compares Waste Management and Omnicom Group's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Waste Management | $15.46 billion | 3.69 | $1.67 billion | $4.40 | 30.69 |
| Omnicom Group | $14.95 billion | 1.15 | $1.34 billion | $6.06 | 13.14 |
Waste Management has higher revenue and earnings than Omnicom Group. Omnicom Group is trading at a lower price-to-earnings ratio than Waste Management, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Waste Management has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, Omnicom Group has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.
Insider & Institutional Ownership
71.4% of Waste Management shares are held by institutional investors. Comparatively, 92.8% of Omnicom Group shares are held by institutional investors. 0.2% of Waste Management shares are held by company insiders. Comparatively, 1.1% of Omnicom Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Analyst Recommendations
This is a summary of current recommendations and price targets for Waste Management and Omnicom Group, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Waste Management | 2 | 5 | 6 | 0 | 2.31 |
| Omnicom Group | 1 | 5 | 3 | 0 | 2.22 |
Waste Management currently has a consensus price target of $122.5833, suggesting a potential downside of 9.23%. Omnicom Group has a consensus price target of $61.7143, suggesting a potential downside of 22.52%. Given Waste Management's stronger consensus rating and higher possible upside, equities analysts clearly believe Waste Management is more favorable than Omnicom Group.
Summary
Waste Management beats Omnicom Group on 9 of the 16 factors compared between the two stocks.
