The Zacks Analyst Blog Highlights: Whole Foods Market, Omnicom Group, PublicisGroupe, WPP and Clear Channel Outdoor Holdings

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Nov 06, 2013, 09:30 ET

CHICAGO, Nov. 6, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Whole Foods Market, Inc. (Nasdaq:WFM-Free Report), Omnicom Group Inc. (NYSE:OMC-Free Report), PublicisGroupe SA (OTC:PUBGY-Free Report), WPP Plc. (Nasdaq:WPPGY-Free Report) and Clear Channel Outdoor Holdings Inc. (NYSE:CCO-Free Report).

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Here are highlights from Tuesday's Analyst Blog:

Will Whole Foods Beat Earnings?

Whole Foods Market, Inc. (Nasdaq:WFM-Free Report) — one of the leading natural and organic foods supermarket chains— is slated to report its fourth-quarter fiscal 2013 results after the market closes on Nov 6, 2013. In the last quarter, it posted a positive surprise of 2.7%. Let's see how things are shaping up for this announcement.

Factors This Past Quarter

The stringent cost-control measures, effective inventory management and improved store-level performance facilitated Whole Foods to register 20% growth in the bottom line during third-quarter fiscal 2013. The company has also been revamping its pricing strategy and concentrating more on value offerings, while maintaining healthy margins.

Earnings Whispers?

Our proven model does not conclusively show that Whole Foods is likely to beat earnings estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: ESP for Whole Foods is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 31 cents.

Zacks Rank #2 (Buy): Whole Foods' Zacks Rank #2 when combined with 0.00% ESP makes surprise prediction difficult. We caution against stocks with a Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Omnicom, Publicis Merger Gets Nod

Shares of advertising behemoths Omnicom Group Inc. (NYSE:OMC-Free Report) and PublicisGroupe SA (OTC:PUBGY-Free Report) are riding high post news of their proposed merger. Share prices of both stocks are up 1.3%, following the approval of their impending merger from U.S. antitrust authorities. However, the merger still needs to be sanctioned by shareholders of both companies.

The merger has already been approved by regulatory authorities of Canada, India, Turkey, South Africa and South Korea.

In July, the world's no. 2 and no. 3 advertising agencies, Omnicom and Publicis, respectively, had signed a definitive agreement to create Publicis Omnicom Group. Arguably, the combined company is the world's biggest communications, advertising, marketing and digital services company. Having combined 2012 revenues of $22.7 billion and an equity market capitalization of approximately $35.1 billion, the transaction is a merger of equals and is expected to close in the current quarter or the first quarter of 2014.

Each shareholder of both companies will hold about 50% of Publicis Omnicom Group's equity. PublicisGroupe's shareholders will receive one newly issued share of the agency for each Publicis share they own, with a special dividend of €1.00 per share. Omnicom shareholders will get 0.813 newly issued share with a special dividend of $2 per share.

This merger is anticipated to reopen avenues for growth and success for the individual companies. The merger will enable the agencies to make best use of their skilled workforce, diverse product offerings, and enhanced global footprint to leverage a list of global and local clients and reap synergistic benefits. Maurice Lévy and John Wren, the CEOs of PublicisGroupe and Omnicom, respectively, will be co-CEOs of the new entity for an initial period of 30 months, following which Lévy will become non-executive Chairman and Wren will continue as the CEO.

Analysts believe that the deal and eventual formation of Publicis Omnicom Group will topple WPP Plc. (Nasdaq:WPPGY-Free Report) as the #1 advertising company. WPP has been a leader in the advertising world since 2008.

Another company in the advertising sector worth considering is Clear Channel Outdoor Holdings Inc. (NYSE:CCO-Free Report) with a Zacks Rank #2 (Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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