Omnicom Business Quality Report (OMC)
Omnicom is an advertising holding company. This Omnicom Business Quality Report explains the Excellent Quality ranking that Omnicom received under my quality ranking system.
Basic Company Information
Company Name: Omnicom Group Inc.
Ticker: OMC
Quality Ranking: Excellent (5)
Primary Reason: Negative Working Capital
Size: Large-Cap
Last Updated: 07/28/2018
Key Points:
Omnicom has a negative cost of capital. (Negative working capital)
Advertising is a low competition industry leading to a high customer retention rate of greater than 95% each year.
Growth does not require the reinvestment of earnings.
Omnicom has a history of shareholder-friendly capital allocation
Omnicom’s Business Quality Description:
Omnicom is an advertising agency holding company. Their business model is highly favorable for shareholders. Omnicom purchases ads and other marketing materials for its clients. These clients are billed for this service and pay for the service prior to Omnicom having to pay radio and TV stations for the ads. This circumstance allows Omnicom to fund it’s working capital requirements from its own clients. This creates a negative working capital cycle for Omnicom.