Omnicom Group Inc (OMC)

Conclusion

Omnicom Group Inc is a New York-based group that provides advertising, marketing and corporate communications services across the Americas, EMEA and Asia Pacific. At 88.50 USD on 2026-11-09, the shares give a market capitalisation of 24.3 billion USD and an enterprise value of 31.8 billion USD.

The verdict is undervalued. The fair value band runs from 118.52 to 177.78 USD, with a midpoint of 148.15 USD and a margin of safety of 67.4% at the current price. The DCF gives 191.39 USD per share at a discount rate of 8.9%, and the fair value from historical multiples is 104.90 USD. Against their own ten-year medians, the P/E of 34.39 sits well above its median of 13.92, and EV/EBITDA of 13.75 sits above its median of 8.28, while P/FCF of 8.48 sits below its median of 10.82. The reverse DCF implies growth of -5.5% a year, against revenue growth of 5.6% a year over five years and free cash flow per share growth of 12.3% a year over the same period.

What holds the case up is free cash flow conversion of 4.06 on a trailing basis, a Beneish M-score of -2.66 that reads as unlikely manipulation, and the margin of safety of 67.4%. What would break it is an Altman Z-score of 1.26 in the distress zone, ROIC of 6.38% against a WACC of 7.07%, and net debt to EBITDA of 3.27.

Financial health

Financial strength is red, pulled down by the Altman Z-score of 1.26 and a current ratio of 0.91 and quick ratio of 0.67, both below one. Net debt to EBITDA of 3.27, interest coverage of 3.77 and debt to equity of 1.14 are neutral. The Altman model was designed for manufacturers, and Omnicom is a service business, so its distress reading is indicative only. Insolvency risk: low, about 3.0% by the estimate of the Ohlson model over one to two years, based on the 2025 year-end figures. The short-term liquidity ratios and the leverage are the points to monitor.

Earnings quality

Earnings quality is yellow. Free cash flow conversion is strong at 4.06 on a trailing basis and 1.42 over five years, and the accrual ratio of -0.07 points to cash earnings. Share count fell 1.07% a year over five years, consistent with buybacks. Stock-based compensation is 0.45% of revenue, leaving free cash flow after it at 2.75 billion USD. The weak point is the Piotroski score of 3 out of 9. The Beneish M-score of -2.66 reads as unlikely. Omnicom beat estimates in 7 of the last 8 quarters, with an average surprise of 12.8%, but estimates are being cut: the current-year estimate moved -3.95% over 90 days and the next-year estimate -7.47%.

Profitability

Profitability is yellow. The gross margin of 18.39% sits above its ten-year median of 16.96%, and the operating margin of 14.29% is in line with its median of 14.26%. The net margin of 2.85% is well below its median of 8.81%. ROIC of 6.38% is below WACC of 7.07%, a ROIC minus WACC of -0.70 points, and its five-year median is 24.95%. Return on equity of 7.09% is flattered by leverage: the equity multiplier is 4.52 and asset turnover is 0.32, and the 2025 net margin in the DuPont split was negative at -0.32%.

Growth

Growth is yellow. Revenue compounded at 6.52% over three years, 5.57% over five years and 1.33% over ten years, and revenue grew in 6 of the 10 comparable years. Free cash flow per share compounded at 49.19% over three years, 12.27% over five and 5.41% over ten. The EPS growth figure is not available. The next-year EPS growth estimate is 9.76%, but the recent estimate cuts lower confidence in it.

Valuation

Valuation is green. Against their ten-year medians, the P/E carries a premium of 147.0% and EV/EBITDA a premium of 66.0%, while P/FCF is at a discount of 21.6%, P/S at 15.6% and P/B at 58.8%. The DCF gives 191.39 USD per share with a discount rate of 8.9%, a first-stage growth of 5.57% and a terminal growth of 2.5%, and the terminal value makes up 56.4% of it. The reverse DCF implies growth of -5.5% against the 5.6% revenue growth delivered over five years. The fair value band is built on fixed assumptions, a 5% equity risk premium and capped growth, and is an order of magnitude, not a price target. The dividend yield is 3.46%, the forward yield 3.85%, and the payout on free cash flow 29.3%.

Risks

An Altman Z-score of 1.26 signals financial pressure, and a current ratio of 0.91 means short-term obligations are slightly larger than current assets, so refinancing terms matter. Net debt to EBITDA of 3.27 and interest coverage of 3.77 leave little room if earnings fall. ROIC below WACC means the business is not currently earning its cost of capital, and falling estimates make a recovery in earnings harder to see. The valuation is also sensitive to the DCF, which depends heavily on the terminal value. The EPS growth figure is not available. This analysis has no debt maturity schedule and no revenue by segment, so it cannot show when debt falls due or which services drive growth.