Reviewing Omnicom Group (NYSE:OMC) and Direct Digital (NASDAQ:DRCT)

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

Earnings & Valuation

This table compares Omnicom Group and Direct Digital”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Omnicom Group	$15.91 billion	0.94	$1.48 billion	$6.97	11.07
Direct Digital	$62.29 million	0.15	-$6.24 million	($1.83)	-0.23

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

Insider and Institutional Ownership

92.0% of Omnicom Group shares are held by institutional investors. Comparatively, 4.0% of Direct Digital shares are held by institutional investors. 1.0% of Omnicom Group shares are held by company insiders. Comparatively, 62.8% of Direct Digital shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for Omnicom Group and Direct Digital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Omnicom Group	0	4	4	0	2.50
Direct Digital	0	1	1	0	2.50

Omnicom Group presently has a consensus price target of $94.43, suggesting a potential upside of 22.41%. Direct Digital has a consensus price target of $6.00, suggesting a potential upside of 1,328.57%. Given Direct Digital’s higher possible upside, analysts clearly believe Direct Digital is more favorable than Omnicom Group.

Risk and Volatility

Omnicom Group has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500. Comparatively, Direct Digital has a beta of 6.01, meaning that its stock price is 501% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Omnicom Group	8.67%	33.62%	5.61%
Direct Digital	-25.99%	N/A	-36.29%

Summary

Omnicom Group beats Direct Digital on 10 of the 13 factors compared between the two stocks.

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.

About Direct Digital

Direct Digital Holdings, Inc. operates as an end-to-end full-service programmatic advertising platform. The company's platform primarily focuses on providing advertising technology, data-driven campaign optimization, and other solutions to underserved and less efficient markets on both the buy- and sell-side of the digital advertising ecosystem. It serves various industry verticals, such as travel, healthcare, education, financial services, consumer products, and other sectors with a focus on small and mid-sized businesses. The company was founded in 2018 and is headquartered in Houston, Texas.