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Service-Sector Earnings to Watch This Week

NEW YORK ( TheStreet) -- This week has no shortage of market-moving companies reporting earnings. This preview takes a look at companies categorized as being in the service sector that I believe you should watch. OMC Chart OMC data by YCharts

Omnicom Group (OMC)

Background: Omnicom Group, together with its subsidiaries, provides advertising, marketing and corporate communications services in the Americas, Europe, the Middle East, Africa, Asia and Australia. It offers services in advertising, customer relationship management, public relations and specialty communications sectors. The company was founded in 1944 and is based in New York. Omnicom trades an average of 1.4 million shares per day and has a market cap of $14 billion.

52-Week Range: $39.72 to $54.76

Book Value: $12.31

Price-to-Book Ratio: 4.2

Omnicom is expected to report strong third-quarter earnings growth before the market opens on Tuesday. The consensus estimate is for earnings per share of 73 cents, a gain of 1 cent from 72 cents during the corresponding quarter last year. The lowest analyst EPS estimate is 71 cents, and the highest is 76 cents.

Most of the analysts covering the stock -- 14 out of 23 -- rate it a hold, which is the rating I'd give it. Seven rate it a buy, and one rates it a sell. The analysts may have missed a great opportunity as the stock surged 35% higher in the last year. The average analyst target price for Omnicom Group is $54.94.

Although the last year was great, in the near term I believe the downside risk is greater than the upside potential. For longer-term buy-and-hold investors, it doesn't matter, but if you're looking for an exit, sooner may be better than later.

Omnicom is in a relatively strong bull trend. The price is breaking below the 60-day moving average as I write this, resulting in lower expectations from me.

Omnicom pays a decent dividend amount, and it appears safe based on the historical payout rate. Investors are receiving $1.15 in dividends for a yield of 2.22%.

Shares short as a percentage of float is slightly elevated at 3.7% but not yet large enough to make me worry. As long as this number stays at less than 4%, I won't give it much thought. But if it starts to trend higher, I would recommend monitoring the stock for a possible exit. OMC Revenue Quarterly Chart OMC Revenue Quarterly data by YCharts
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