Dentsu Inc. (JP:4324)
:4324
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Dentsu
(4324)
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Rating:64Neutral
Price Target:
¥3,411.00
▼(-0.41% Downside)
Action:Reiterated
Date:05/20/26
The score is primarily held back by weak bottom-line profitability and elevated leverage despite solid operating performance and positive free cash flow. Technicals are supportive with price trading above major moving averages, and valuation metrics (low P/E and high yield) are attractive. Earnings call takeaways are mixed: guidance was reiterated with improving underlying profitability, but growth is muted and performance is uneven across regions with reliance on one-offs in statutory results.
Positive Factors
Top-line growth and operating margins
Sustained revenue expansion combined with solid gross profit and EBIT/EBITDA margins indicates Dentsu’s core agency and media businesses retain pricing power and scalable delivery. Durable operating profitability supports reinvestment in digital capabilities and buffers against cyclical ad spend swings.
Negative Factors
Elevated leverage and weakened equity
Debt exceeding equity and negative ROE materially constrain financial flexibility. Elevated leverage limits capacity for acquisitions, increases refinancing risk in stressed markets and constrains capital returns. Over a 2–6 month horizon it raises vulnerability if revenue softness persists.
Read all positive and negative factors
Positive Factors
Negative Factors
Top-line growth and operating margins
Sustained revenue expansion combined with solid gross profit and EBIT/EBITDA margins indicates Dentsu’s core agency and media businesses retain pricing power and scalable delivery. Durable operating profitability supports reinvestment in digital capabilities and buffers against cyclical ad spend swings.
Read all positive factors
Dentsu (4324) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
¥780.32B
Dividend Yield4.19%
Average Volume (3M)1.26M
Price to Earnings (P/E)―
Beta (1Y)0.65
Revenue Growth1.69%
EPS Growth-53.40%
CountryJP
Employees67,667
SectorCommunication Services
Sector Strength97
IndustryAdvertising Agencies
Share Statistics
EPS (TTM)-1131.51
Shares Outstanding265,800,000
10 Day Avg. Volume915,960
30 Day Avg. Volume1,261,200
Financial Highlights & Ratios
PEG Ratio-0.04
Price to Book (P/B)2.30
Price to Sales (P/S)0.60
P/FCF Ratio9.48
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
¥3,055.00Price Target Upside-10.80% Downside
Rating ConsensusHold
Number of Analyst Covering6
EPS Forecast (FY)320.91
Revenue Forecast (FY)¥1.45T
Dentsu Business Overview & Revenue Model
Company Description
Dentsu 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 service...
How the Company Makes Money
Dentsu primarily makes money by delivering marketing and communications services to client companies and earning fees tied to the planning, creation, execution, and measurement of marketing activities. Key revenue streams typically include: (1) In...
Dentsu Earnings Call Summary
Earnings Call Date:May 15, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 19, 2026
Earnings Call Sentiment Neutral
The call highlighted meaningful underlying profit improvement, strong Japan performance, several strategic client wins, accelerated AI adoption and defined cost-reduction measures. However, organic group growth was muted (0.8%), APAC and parts of the Americas and EMEA businesses showed notable declines (APAC -7.5%, Americas -3.0%, Americas Creative -12.4%, APAC CXM -24.2%), and statutory profit strength was materially supported by one-off asset sales. Management reiterated guidance but emphasized macro and geopolitical uncertainty and a continued negative distributable profit position. Overall, positives in profitability, structural actions and technology initiatives are balanced against uneven regional performance and lingering balance-sheet and demand risks.Positive Updates
Group Revenue and Underlying Profit Growth
Consolidated net revenue increased 2.7% year-on-year to JPY 295.1 billion. Underlying operating profit rose 11.5% year-on-year to JPY 37.8 billion, driving an operating margin of 12.8% (up 100 basis points YoY).
Negative Updates
EMEA CXM and Creative Pressure
Although EMEA posted modest organic growth of 0.8%, CXM declined 5.7% and Creative declined 5.0%, with larger market challenges in the United Kingdom and Switzerland. EMEA operating margin remains low at 3.1%.
Read all updates
Q1-2026 Updates
Positive
Negative
Group Revenue and Underlying Profit Growth
Consolidated net revenue increased 2.7% year-on-year to JPY 295.1 billion. Underlying operating profit rose 11.5% year-on-year to JPY 37.8 billion, driving an operating margin of 12.8% (up 100 basis points YoY).
Read all positive updates
Company Guidance
Dentsu reiterated its full‑year guidance after a Q1 that slightly beat expectations: group organic growth 0.8%, consolidated net revenue JPY295.1bn (+2.7% YoY), underlying operating profit JPY37.8bn (+11.5%) and operating margin 12.8% (+100bps); underlying basic EPS JPY75.43 (+18.4%); statutory operating profit JPY65.0bn (+155.5%) and statutory net profit JPY40.2bn (+540.5%) (including circa JPY30bn operating and circa JPY22bn net gains from the Dentsu Ginza Building sale and other transaction gains). By region Q1 organics were Japan +4.7% (12 consecutive quarters positive; Japan operating margin 30.8%, +180bps), Americas -3% (Media +0.5%, Creative -12.4%; FY guide ~-2%), EMEA +0.8% (Media +5.3%, CXM -5.7%, Creative -5%; FY guide ~+1%) and APAC -7.5% (Media -2.5%, CXM -24.2%, Creative -9.5%; FY guide ~+1%). Cost actions contributed to performance (staff costs down JPY5.9bn, operating expenses down JPY1.8bn), and management announced further savings from an EMEA HQ reorganization (~JPY1.7bn p.a.) and ANZ CRM divestment (~JPY2.5bn p.a. plus several hundred million yen), while expecting distributable profit to improve by JPY70–80bn to around -JPY160bn and non‑consolidated net assets to turn positive at about JPY20bn; the decision to withhold dividends for FY2026 remains unchanged.Dentsu Financial Statement Overview
Summary
Income Statement
34
Negative
Balance Sheet
41
Neutral
Cash Flow
62
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.45T | 1.44T | 1.41T | 1.30T | 1.25T | 1.09T |
| Gross Profit | 1.21T | 1.20T | 1.13T | 1.07T | 1.05T | 901.13B |
| EBITDA | 225.82B | 223.15B | 217.56B | 207.45B | 243.90B | 218.91B |
| Net Income | -293.72B | -327.60B | -192.17B | -10.71B | 59.85B | 108.39B |
Balance Sheet | ||||||
| Total Assets | 3.04T | 3.21T | 3.51T | 3.63T | 3.74T | 3.72T |
| Cash, Cash Equivalents and Short-Term Investments | 255.89B | 295.18B | 371.99B | 390.68B | 603.74B | 723.54B |
| Total Debt | 451.90B | 468.24B | 754.77B | 713.46B | 756.59B | 771.27B |
| Total Liabilities | 2.57T | 2.76T | 2.74T | 2.72T | 2.79T | 2.81T |
| Stockholders Equity | 417.23B | 374.85B | 696.84B | 841.65B | 880.27B | 845.03B |
Cash Flow | ||||||
| Free Cash Flow | 109.92B | 91.06B | 34.30B | 46.38B | 62.37B | 118.68B |
| Operating Cash Flow | 136.44B | 117.97B | 59.98B | 75.27B | 80.90B | 139.72B |
| Investing Cash Flow | -447.00M | -3.48B | -43.33B | -159.44B | -36.37B | 155.23B |
| Financing Cash Flow | -204.47B | -179.84B | -53.30B | -140.54B | -176.17B | -125.19B |
Dentsu Technical Analysis
Negative
3425.00
Price Trends
2951.50
Positive
2984.14
Positive
3083.18
Negative
Market Momentum
23.12
Positive
48.00
Neutral
36.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4324, the sentiment is Negative. The current price of 3425 is above the 20-day moving average (MA) of 3045.22, above the 50-day MA of 2951.50, and above the 200-day MA of 3083.18, indicating a neutral trend. The MACD of 23.12 indicates Positive momentum. The RSI at 48.00 is Neutral, neither overbought nor oversold. The STOCH value of 36.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4324.
Dentsu Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | ¥118.88B | 25.46 | ― | 7.03% | 7.05% | 29.76% | |
67 Neutral | ¥67.78B | 20.73 | ― | 2.51% | 0.95% | -18.56% | |
64 Neutral | ¥780.32B | -2.68 | -59.21% | 4.19% | 1.69% | -53.40% | |
63 Neutral | ¥410.79B | 24.37 | 3.96% | 2.75% | -9.68% | 57.29% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
58 Neutral | ¥655.61B | 15.92 | 18.07% | 1.27% | 14.19% | 96.77% | |
50 Neutral | ¥11.82B | 7.50 | ― | ― | 4.27% | 3453.18% |
* Communication Services Sector Average
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Dentsu Corporate Events
Dentsu Delivers Strong Profit Rebound in First Quarter of 2026
May 15, 2026
Dentsu reported consolidated revenue of ¥357.1 billion and net revenue of ¥295.1 billion for the quarter ended March 31, 2026, representing year-on-year growth of 3.5% and 2.7%, respectively. Underlying operating profit rose to ¥37....
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.