May 26, 2008 - Omnicom Group Inc. (OMC-NYSE) ranks as the world's #1 corporate media services conglomerate, with advertising, marketing, and public relations operations serving some 5,000 clients in more than 100 countries. It serves global advertising clients through its agency networks BBDO Worldwide, DDB Worldwide, and TBWA Worldwide, while such firms as GSD&M's Idea City, Merkley Partners, and Zimmerman Advertising provide services for regional and national clients. More than 160 other firms in its Diversified Agency Services division, including Fleishman-Hillard, Integer, and Rapp Collins, provide public relations and other marketing services.

Earnings have grown every year since1992. Starting at 29 cents a share 16 years ago, earnings have progressed to $2.18 in 2005, then $2.50, follwed by $2.95 last year. For 2008 analysts are looking for $3.35, next year, $3.70. (All data reflect a 2 for 1 split last year.) Over the next 5 years, analysts see earnings increasing by 10% a year, on average.

On the revenue side, 2005 sales were $10.481 billion, followed by $11.276 billion, then $12.694 billion. Analysts look for $13.94 billion this year and $14.775 next year. International billings were almost half of total sales (47% in 2007). While many companies are lowering their forecasts for sales and earnings, this is one that shows growth.

For the first quarter of the fiscal year (ended March 31), earnings were 65 cents a share, up 20% above the same quarter last year. Next quarter look for earnings of 96 cents, then 70 cents and for the last quarter $1.04. During the last economic slowdown, OMC fared well compared to most companies. During this economic challenge, it should duplicate that success unless the recession becomes much worse than everyone believes.

More numbers: Return on Equity is an outstanding 25% and has been between 18% and 28% over the last 9 years. Analysts don't see it below 25% over the next 5 years. P/E ratio is a reasonable 16. Officers and directors own about 5% of the stock. Market cap is $16 billion with 323 million shares outstanding. There's an annual 60 cent dividend (raised from 55 cents last year) that gives a yield of 1.2%.

With good cash flow and over $1.8 billion in cash, the company has several options. It can buy back stock to boost earnings. It can acquire more companies (it bought Ketchum Communications in 1996 and GGT Group plc in 1998). Or it can raise the dividend. Or do all three. Such is the benefit of having money.

Look into OMC if diversification is your goal. With a strong global reach and a proven record for delivering increasing earnings, it may be a stock that fits your investing parameters.

- Company Web site: www.omnicomgroup.com

- Ted Allrich