Education
About Us
Working with TipRanks
Follow Us
Dentsu Inc. (JP:4324)
:4324
Top Page
Dentsu
(OTC:4324)
50Neutral
Dentsu (4324) vs. S&P 500 (SPY)
Market Cap
$770.29B
Dividend Yield4.94%
Average Volume (3M)1.32M
Price to Earnings (P/E)―
Beta (1Y)0.82
Revenue Growth8.20%
EPS Growth-1728.50%
CountryJP
Employees67,667
SectorCommunication Services
Sector Strength82
IndustryAdvertising Agencies
Share Statistics
EPS (TTM)-740.32
Shares Outstanding265,800,000
10 Day Avg. Volume896,130
30 Day Avg. Volume1,320,550
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$3,186.95Price Target Upside4.83% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering2
Dentsu Business Overview & Revenue Model
Company DescriptionDentsu Group Inc. operates in the advertising business in Japan. The company offers advertising services, including newspapers, magazines, radio, television, internet, sales promotions, movies, out-of-home, public transportation, and other services. It is also involved in the consulting, development, and operation of information systems; sale of various software products; and provision of marketing and comprehensive network services. In addition, the company leases office buildings; and buys and sells real estate properties, as well as offers building and calculation services. Dentsu Group Inc. was founded in 1901 and is headquartered in Tokyo, Japan.
How the Company Makes MoneyDentsu makes money primarily through providing advertising and marketing services to businesses and organizations. Its revenue model is based on service fees for advertising campaigns, media buying, and strategic consulting. Key revenue streams include digital marketing services, traditional media advertising, and integrated marketing solutions. Dentsu also generates income from its data analytics and technology-driven services that help clients optimize their marketing strategies. The company has significant partnerships and collaborations with media companies, technology firms, and other agencies, which enhance its service offerings and contribute to its earnings by enabling it to provide comprehensive solutions to its clients.
Dentsu Financial Statement Overview
Summary
Dentsu faces significant profitability challenges, with negative net income and EBIT margins despite revenue growth. The balance sheet shows moderate leverage, but declining equity poses a risk. Cash flow generation is mixed, with operational cash flow providing some strength despite declining free cash flow growth.Income Statement
The company's revenue has shown a modest growth rate of approximately 8% from 2023 to 2024, which is positive. However, the company is struggling with profitability, as evidenced by a negative net income in 2024, leading to negative net profit margins. The EBIT margin has also turned negative, indicating operational challenges. EBITDA margin is still positive, suggesting some operational cash flow strength, but overall profitability issues weigh down the score.―
Balance Sheet
The balance sheet shows a manageable debt-to-equity ratio of approximately 0.79 in 2024, indicating a reasonable level of leverage. However, the decline in stockholders' equity over the years reflects financial strain. The equity ratio stands at around 19.9%, suggesting a moderate level of equity financing. While the company is not highly leveraged, the erosion of equity affects the overall strength of the balance sheet.60
Cash Flow
The free cash flow has decreased from 2023 to 2024, indicating challenges in maintaining cash from operations. The operating cash flow to net income ratio is positive, highlighting the company's ability to generate cash despite negative net income. However, the free cash flow to net income ratio is also positive, which suggests some resilience, but declining free cash flow growth limits the score.―
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.41T | 1.30T | 1.24T | 1.09T | 939.24B | Gross Profit |
| 1.20T | 1.14T | 1.12T | 976.58B | 835.04B | EBIT |
| -124.99B | 128.73B | 194.43B | 150.95B | 103.04B | EBITDA |
| 202.42B | 139.50B | 241.90B | 302.49B | -32.61B | Net Income Common Stockholders |
| -192.17B | -10.71B | 59.85B | 108.39B | -152.29B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 371.99B | 390.68B | 622.47B | 743.00B | 542.85B | Total Assets |
| 3.51T | 3.63T | 3.74T | 3.72T | 3.38T | Total Debt |
| 547.27B | 713.46B | 532.43B | 579.19B | 584.81B | Net Debt |
| 175.28B | 322.79B | -71.31B | -144.35B | 54.12B | Total Liabilities |
| 2.74T | 2.72T | 2.79T | 2.81T | 2.56T | Stockholders Equity |
| 696.84B | 841.65B | 880.27B | 845.03B | 756.87B |
| Cash Flow | Free Cash Flow | |||
| 34.30B | 46.38B | 62.37B | 118.68B | 66.84B | Operating Cash Flow |
| 59.98B | 75.27B | 80.90B | 139.72B | 88.31B | Investing Cash Flow |
| -30.91B | -146.30B | -24.35B | 262.23B | 137.01B | Financing Cash Flow |
| -65.71B | -153.68B | -188.19B | -232.19B | -96.62B |
Dentsu Technical Analysis
Neutral
3040.00
Price Trends
3127.52
Negative
3385.76
Negative
3800.69
Negative
Market Momentum
-36.79
Negative
51.83
Neutral
74.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4324, the sentiment is Neutral. The current price of 3040 is above the 20-day moving average (MA) of 2925.90, below the 50-day MA of 3127.52, and below the 200-day MA of 3800.69, indicating a neutral trend. The MACD of -36.79 indicates Negative momentum. The RSI at 51.83 is Neutral, neither overbought nor oversold. The STOCH value of 74.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:4324.
Dentsu Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | ¥384.56B | 25.46 | 1.83% | 7.49% | 1.09% | ||
74 Outperform | ¥1.29T | 28.74 | 1.73% | 24.10% | 11.27% | ||
66 Neutral | ¥37.64B | 11.62 | 2.33% | 5.01% | -39.80% | ||
60 Neutral | $13.50B | 7.33 | -2.74% | 3.80% | 2.09% | -39.49% | |
50 Neutral | $770.29B | ― | -24.24% | 4.94% | 8.20% | -1728.50% |
* Communication Services Sector Average
Performance Comparison
JP:4324
Dentsu
3,040.00
-1,063.98
-25.93%
RKUNF
Rakuten
5.94
0.74
14.23%
HKUOF
Hakuhodo Dy Holdings
7.02
-2.28
-24.52%
JP:4812
DENTSU SOKEN INC.
6,670.00
1,374.23
25.95%
JP:9719
SCSK Corporation
4,334.00
1,524.65
54.27%
JP:9740
Central Security Patrols Co., Ltd.
2,605.00
-92.59
-3.43%
Dentsu Earnings Call Summary
Earnings Call Date:Feb 14, 2025
(Q4-2024)
| % Change Since: -13.46%|
Next Earnings Date:May 15, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed sentiment, with strong performance and growth in Japan and strategic plans for future improvements. However, significant challenges and losses in the international segment, especially due to goodwill impairment, weigh heavily on the overall outlook.Q4-2024 Updates
Positive Updates
Japan Business Performance
The Japan business performed very well, with net revenue reaching a record high for the fourth consecutive year, and underlying operating profit also reaching a record high.
Improved Pitch Win Rate
The company's pitch win rate improved further in fiscal 2024, indicating strong momentum heading into 2025.
Shareholder Returns
The company completed a JPY 20 billion share buyback and maintained an annual dividend per share at JPY 139.5, the same amount as the previous year.
Net Revenue and Operating Margin
Net revenue increased by 5.7% year-on-year to JPY 1191.4 billion, and the operating margin improved by 30 basis points year-on-year to 14.8%, exceeding the November guidance by 80 basis points.
Sustainability and Industry Recognition
Dentsu was selected as a component of the DJSI World for the second consecutive year and named as a leader in the Forrester Wave Media Management Services.
Negative Updates
Goodwill Impairment Loss
The company recorded a goodwill impairment loss of JPY 210.1 billion in the international business in the fourth quarter, primarily related to EMEA but also affecting the Americas.
Significant Statutory Loss
A significant statutory loss was recorded for the year, with an operating loss of JPY 125 billion and a net loss of JPY 192.2 billion.
International Business Challenges
The international business faced challenges, with underperformance in the Americas and APAC remaining negative, and the U.K. and U.S. reporting negative organic growth.
CXM Segment Decline
The CXM segment continued to face challenging business conditions, resulting in a double-digit decline due to reduced client budgets and sales cycle delays.
Company Guidance
During the Dentsu FY 2024 earnings call, several metrics were highlighted in the guidance provided by the company's leaders. The organic growth rate for FY 2024 was reported at minus 0.1%, aligning with the November guidance. The fourth quarter saw an organic growth rate of 2.6%, indicating improvement. Net revenue increased by 5.7% year-on-year to JPY 1,191.4 billion, with underlying operating profit rising by 7.8% to JPY 176.2 billion. The company's consolidated full-year operating margin improved by 30 basis points year-on-year, resulting in a margin of 14.8%, exceeding previous guidance by 80 basis points. Despite these positive metrics, a significant statutory loss was recorded, driven by a goodwill impairment loss of JPY 210.1 billion, primarily affecting the EMEA and Americas regions. The goodwill impairment led to an operating loss of JPY 125 billion and a net loss of JPY 192.2 billion. However, the Japan business showed strong performance, achieving record high net revenue for the fourth consecutive year. Looking ahead, Dentsu aims for an organic growth rate of 4% and an operating margin of 16% to 17% by 2027, with a focus on restoring profitability and competitiveness through strategic investments and restructuring efforts.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.