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Dentsu (JP:4324)
:4324
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Dentsu
(OTC:4324)
Rating:56Neutral
Price Target:
¥3,195.00
▲(0.13%Upside)
Dentsu (4324) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
¥829.85B
Dividend Yield4.37%
Average Volume (3M)1.08M
Price to Earnings (P/E)―
Beta (1Y)0.87
Revenue Growth6.88%
EPS Growth-1044.58%
CountryJP
Employees67,667
SectorCommunication Services
Sector Strength93
IndustryAdvertising Agencies
Share Statistics
EPS (TTM)24.15
Shares Outstanding265,800,000
10 Day Avg. Volume1,383,150
30 Day Avg. Volume1,083,733
Financial Highlights & Ratios
PEG Ratio-0.45
Price to Book (P/B)1.29
Price to Sales (P/S)0.00
P/FCF Ratio18.22
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
¥3,199.31Price Target Upside0.26% Upside
Rating ConsensusHold
Number of Analyst Covering1
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 Earnings Call Summary
Earnings Call Date:May 15, 2025
(Q1-2025)
| % Change Since: 3.67%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment. On one hand, Japan's strong performance and strategic initiatives aimed at cost reduction and media expansion present positive developments. However, significant challenges remain in international regions, particularly in the CXM business, and increased economic uncertainty adds to the concerns.Q1-2025 Updates
Positive Updates
Strong Performance in Japan
Japan recorded an organic growth of 5.5% for the first quarter, marking the eighth consecutive quarter of positive growth. Net revenue reached a new record high for the first quarter, with an underlying operating profit at the second highest on record.
Expanded Media Contracts
Dentsu expanded its media contracts with Heineken to cover over 100 markets, demonstrating its commitment to excellence in media partnerships.
Cost Reduction Initiatives
Dentsu has identified initiatives that will bring approximately 90% of the expected JPY50 billion cost reduction, aiming to achieve an operating margin of 16% to 17% by FY 2027.
Recognition in Industry Awards
Dentsu received 'Network of the Year' at ADFEST and a Grand Prix at SPIKES Asia, highlighting its continued excellence in the industry.
Improved Operating Margin
The operating margin increased by 140 basis points year-on-year to 11.8%.
Negative Updates
Negative Growth in International Regions
All three international regions recorded negative organic growth. The Americas experienced a negative 5.1% growth, and EMEA's growth was negative 0.9%.
Challenges in CXM Business
CXM continued to face challenging conditions, particularly in the Americas and EMEA, with a continuation of trends from the previous year resulting in a double-digit decline.
Underperforming Markets and Entities
Dentsu identified underperforming markets and entities, with plans to revitalize these areas or consider reorganization, withdrawal, or divestment if necessary.
Slow Market Recovery
The slower-than-expected recovery of CXM, particularly in the Americas and some EMEA markets, continues to impact overall performance.
Economic Uncertainty
Increased uncertainty in the global economy due to challenges such as U.S. tariff policies and macroeconomic conditions.
Company Guidance
In the first quarter of FY 2025, Dentsu reported an organic growth rate of 0.2%, with consolidated group net revenue increasing by 0.3% year-on-year to JPY 287.3 billion. The underlying operating profit rose by 13.7% year-on-year to JPY 33.9 billion, resulting in an operating margin of 11.8%, up 140 basis points from the previous year. The Japan segment, accounting for 45% of the group's revenue, saw a robust organic growth of 5.5%, marking the eighth consecutive quarter of positive growth. In contrast, the Americas and EMEA regions experienced negative organic growth rates of -5.1% and -0.9%, respectively, mainly due to challenging conditions in the Customer Experience Management (CXM) sector. Despite these challenges, the company maintained its full-year guidance and emphasized ongoing strategic investments and cost control measures to achieve an operating margin target of 16-17% by FY 2027.Dentsu Financial Statement Overview
Summary
Dentsu's financial performance shows strengths in cash flow generation and gross profit margin. However, challenges include persistent net losses, negative net profit margins, and high leverage. The company must improve operational efficiency and profitability to bolster financial health.Income Statement
Dentsu's income statement shows a concerning trend with negative net income in recent periods, including TTM. The gross profit margin remains strong, but the net profit margin has been negative, driven by significant EBIT losses. Revenue growth has been positive over the years, but the profitability metrics indicate challenges in cost management and operational efficiency. The EBITDA margin improved in TTM, but overall, the income statement reflects financial distress.40
Negative
Balance Sheet
The balance sheet of Dentsu indicates moderate financial stability with a manageable debt-to-equity ratio and a reasonable equity ratio. Total assets have decreased, reflecting a contraction in the balance sheet. Stockholders' equity has been stable, but the liabilities remain high, pointing to leverage that could pose risks if profitability does not improve. Overall, the balance sheet shows resilience but highlights the need for better capital structure management.55
Neutral
Cash Flow
Dentsu's cash flow statement reveals a strong operating cash flow relative to net income, indicating good cash generation capability despite net losses. Free cash flow has shown significant growth in TTM, which is a positive sign for liquidity. The company maintains a healthy level of free cash flow, but capital expenditures and financing cash flows suggest careful management to sustain operations. Overall, cash flow performance is a bright spot, supporting liquidity amidst financial challenges.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.42T | 1.41T | 1.30T | 1.24T | 1.09T | 939.24B |
| Gross Profit | 1.20T | 1.20T | 1.14T | 1.12T | 976.58B | 835.04B |
| EBITDA | 195.67B | -29.60B | 139.50B | 241.90B | 302.49B | -32.61B |
| Net Income | -191.46B | -192.17B | -10.71B | 59.85B | 108.39B | -152.29B |
Balance Sheet | ||||||
| Total Assets | 3.26T | 3.51T | 3.63T | 3.74T | 3.72T | 3.38T |
| Cash, Cash Equivalents and Short-Term Investments | 315.17B | 397.19B | 390.68B | 622.47B | 723.54B | 542.85B |
| Total Debt | 562.80B | 547.27B | 713.46B | 532.43B | 579.19B | 584.81B |
| Total Liabilities | 2.52T | 2.74T | 2.72T | 2.79T | 2.81T | 2.56T |
| Stockholders Equity | 665.28B | 696.84B | 841.65B | 880.27B | 845.03B | 756.87B |
Cash Flow | ||||||
| Free Cash Flow | 137.92B | 34.30B | 46.38B | 62.37B | 118.68B | 66.84B |
| Operating Cash Flow | 161.39B | 59.98B | 75.27B | 80.90B | 139.72B | 88.31B |
| Investing Cash Flow | -13.29B | -30.91B | -146.30B | -24.35B | 262.23B | 137.01B |
| Financing Cash Flow | -115.03B | -65.71B | -153.68B | -188.19B | -232.19B | -96.62B |
Dentsu Technical Analysis
Positive
3191.00
Price Trends
3007.61
Positive
3093.14
Positive
3561.38
Negative
Market Momentum
29.07
Negative
67.01
Neutral
50.60
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4324, the sentiment is Positive. The current price of 3191 is above the 20-day moving average (MA) of 3053.54, above the 50-day MA of 3007.61, and below the 200-day MA of 3561.38, indicating a neutral trend. The MACD of 29.07 indicates Negative momentum. The RSI at 67.01 is Neutral, neither overbought nor oversold. The STOCH value of 50.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4324.
Dentsu Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | ¥88.89B | 24.70 | 7.39% | -17.46% | 43.19% | ||
74 Outperform | $824.97B | 36.29 | 14.25% | 0.98% | 6.67% | 114.29% | |
67 Neutral | ¥25.24B | 5.79 | 6.40% | 5.36% | 32.46% | ||
67 Neutral | $433.74B | 40.30 | 2.71% | 2.71% | 0.69% | -56.84% | |
63 Neutral | ¥28.75B | 22.23 | 3.69% | -5.88% | 15.11% | ||
61 Neutral | $41.22B | -1.26 | -14.49% | 3.95% | 2.29% | -73.14% | |
56 Neutral | ¥829.85B | ― | -24.51% | 4.37% | 6.88% | -1044.58% |
* Communication Services Sector Average
Performance Comparison
JP:4324
Dentsu
3,191.00
-679.11
-17.55%
JP:2461
FAN Communications. Inc.
434.00
44.26
11.36%
JP:2491
ValueCommerce Co., Ltd.
781.00
-323.38
-29.28%
JP:4293
Septeni Holdings Co., Ltd.
424.00
78.20
22.61%
JP:4751
CyberAgent
1,629.50
656.17
67.42%
JP:2433
Hakuhodo Dy Holdings
1,181.50
56.60
5.03%
Dentsu Corporate Events
Dentsu Group Inc. Reports Mixed Financial Results for Q1 2025
May 15, 2025
Dentsu Group Inc. reported its financial results for the first quarter of 2025, showing a revenue increase of 3.7% compared to the previous year, reaching 345,160 million yen. Despite the revenue growth, net revenue slightly decreased by 0.6% to 287,287 million yen, and the operating profit saw a significant rise of 75.5% to 25,426 million yen. The results indicate a mixed performance with growth in some financial metrics and declines in others, reflecting the company’s ongoing adjustments in a competitive market.
The most recent analyst rating on (JP:4324) stock is a Hold with a Yen3480.00 price target. To see the full list of analyst forecasts on Dentsu stock, see the JP:4324 Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.