Omnicom Group (NYSE:OMC) versus iHeartMedia (NASDAQ:IHRT) Critical Review

iHeartMedia (NASDAQ:IHRT) and Omnicom Group (NYSE:OMC) are both communication services companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, institutional ownership, profitability, valuation, analyst recommendations, risk and earnings.

Valuation & Earnings

This table compares iHeartMedia and Omnicom Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
iHeartMedia	$3.86 billion	0.09	-$472.87 million	($1.82)	-1.24
Omnicom Group	$17.27 billion	1.19	-$54.50 million	$1.16	64.37

Omnicom Group has higher revenue and earnings than iHeartMedia. iHeartMedia is trading at a lower price-to-earnings ratio than Omnicom Group, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

93.9% of iHeartMedia shares are owned by institutional investors. Comparatively, 92.0% of Omnicom Group shares are owned by institutional investors. 10.2% of iHeartMedia shares are owned by insiders. Comparatively, 1.2% of Omnicom Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for iHeartMedia and Omnicom Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
iHeartMedia	2	1	0	0	1.33
Omnicom Group	2	5	4	0	2.18

iHeartMedia presently has a consensus price target of $4.25, indicating a potential upside of 88.05%. Omnicom Group has a consensus price target of $99.00, indicating a potential upside of 32.58%. Given iHeartMedia’s higher probable upside, equities analysts plainly believe iHeartMedia is more favorable than Omnicom Group.

Profitability

This table compares iHeartMedia and Omnicom Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
iHeartMedia	-7.18%	N/A	-1.12%
Omnicom Group	1.74%	24.73%	5.15%

Volatility and Risk

iHeartMedia has a beta of 2.19, meaning that its stock price is 119% more volatile than the S&P 500. Comparatively, Omnicom Group has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.

Summary

Omnicom Group beats iHeartMedia on 10 of the 14 factors compared between the two stocks.

About iHeartMedia

iHeartMedia, Inc. operates as an audio media company in the United States and internationally. It operates through three segments: Multiplatform Group, Digital Audio Group, and Audio & Media Services Group. The Multiplatform Group segment offers broadcast radio stations, sponsorship and events, and live and virtual events; and operates Premiere Networks, a national radio network that produces, distributes, or represents syndicated radio programs and services to radio station affiliates. It also delivers real-time traffic flow and incident information, and weather updates, sports, and news. The Digital Audio Group segment provides podcasting, digital sites, newsletters, digital services, and programs; and iHeartRadio, a mobile app and web based service for radio stations, digital only stations, custom artist stations, and podcasts. The Audio and Media Services Group segment engages in the media representation business; and provides scheduling and broadcast software and services. This segment also provides RCS, a cloud and on-premises broadcast software, such as radio and television automation, music scheduling, newsroom automation, advertising sales management, disaster recovery solutions; and real-time audio recognition technology to radio and television stations, cable channels, record labels, advertisers, and agencies, as well as media streaming and research services. The company was formerly known as CC Media Holdings, Inc. and changed its name to iHeartMedia, Inc. in September 2014. The company is headquartered in San Antonio, Texas.

About Omnicom Group

Omnicom Group Inc., together with its subsidiaries, offers advertising, marketing, and corporate communications services. It provides a range of services in the areas of advertising and media, precision marketing, commerce and branding, experiential, execution and support, public relations, and healthcare. The company's services include advertising, branding, content marketing, corporate social responsibility consulting, crisis communications, custom publishing, data analytics, database management, digital/direct marketing and post-production, digital transformation consulting, entertainment marketing, experiential marketing, field marketing, sales support, financial/corporate business-to-business advertising, graphic arts/digital imaging, healthcare marketing and communications, and instore design services. Its services also comprise interactive marketing, investor relations, marketing research, media planning and buying, retail media planning and buying, merchandising and point of sale, mobile marketing, multi-cultural marketing, non-profit marketing, organizational communications, package design, product placement, promotional marketing, public affairs, public relations, retail marketing, retail media and e-commerce, search engine marketing, shopper marketing, social media marketing, and sports and event marketing services. It operates in the North and Latin America, Europe, the Middle East and Africa (EMEA), and the Asia Pacific. The company was incorporated in 1944 and is based in New York, New York.