Dentsu (4324) AI Stock Analysis

• Market Cap: ¥745.33B
• Dividend Yield: 4.83%
• Average Volume (3M): 1.33M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.87
• Revenue Growth: 6.88%
• EPS Growth: -1044.58%
• Country: JP
• Employees: 67,667
• Sector: Communication Services
• Sector Strength: 81
• Industry: Advertising Agencies
• EPS (TTM): 24.15
• Shares Outstanding: 265,800,000
• 10 Day Avg. Volume: 1,627,750
• 30 Day Avg. Volume: 1,334,660
• PEG Ratio: -9.04
• Price to Book (P/B): 1.11
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 5.34
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ¥3,199.40
• Price Target Upside: 11.63% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 50 Neutral
• Price Target: ¥2,981.00 ▲(4.01%Upside)

Dentsu's overall stock score reflects a challenging outlook. The most significant factor is the financial distress, with persistent net losses and high leverage impacting the score negatively. Technical analysis further indicates bearish sentiments, compounded by mixed valuation signals. Although the earnings call highlights strong performance in Japan, international challenges and economic uncertainties remain significant hurdles.

Dentsu Business Overview & Revenue Model

Company Description

Dentsu Inc. (4324) is a leading global advertising and public relations company headquartered in Tokyo, Japan. The company operates across various sectors, primarily focusing on marketing, communications, and digital solutions. Dentsu provides a wide range of services including advertising, media planning, and buying, content creation, brand strategy, digital marketing, and data analytics. With a strong presence in numerous international markets, Dentsu collaborates with a diverse portfolio of clients to enhance their brand value and communication strategies.

How the Company Makes Money

Dentsu makes money through a comprehensive revenue model centered around its diverse range of marketing and advertising services. The company earns revenue primarily from fees charged for media planning and buying, which involves negotiating and purchasing advertising space on behalf of clients. Additionally, Dentsu generates income from creative services, such as developing advertising campaigns, and digital marketing services, which include online advertising, search engine optimization, and social media management. A significant portion of its revenue also comes from data analytics and consumer insights services that help clients understand market trends and target their audiences more effectively. Furthermore, Dentsu has established strategic partnerships and collaborations with global technology firms and media companies, enhancing its service offerings and broadening its revenue streams. The company’s expansive global network and innovative solutions contribute significantly to its earnings.

Dentsu Financial Statement Overview

Summary

Dentsu's financial performance shows mixed results. While cash flow is strong and the balance sheet is stable, ongoing net losses and high leverage are concerning. The income statement reflects financial distress, requiring improvements in cost management and operational efficiency.

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.

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.

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.

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
EBITDA	-29.60B	139.50B	241.90B	302.49B	-32.61B
Net Income	-192.17B	-10.71B	59.85B	108.39B	-152.29B
Balance Sheet
Total Assets	3.51T	3.63T	3.74T	3.72T	3.38T
Cash, Cash Equivalents and Short-Term Investments	397.19B	390.68B	622.47B	723.54B	542.85B
Total Debt	547.27B	713.46B	532.43B	579.19B	584.81B
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

• Technical Analysis Sentiment: Negative
• Last Price: 2866.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 2866 is below the 20-day moving average (MA) of 3027.82, below the 50-day MA of 3039.23, and below the 200-day MA of 3472.98, indicating a bearish trend. The MACD of -49.40 indicates Positive momentum. The RSI at 38.77 is Neutral, neither overbought nor oversold. The STOCH value of 16.91 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4324.

Dentsu Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4293	77 Outperform	¥89.10B	24.76		7.31%	-17.46%	43.19%
4751	74 Outperform	$760.67B	35.16	14.25%	1.06%	6.67%	114.29%
2491	67 Neutral	¥25.63B	5.90		6.30%	5.36%	32.46%
Sector *	66 Neutral	¥374.59B	14.94	2.24%	2.46%	5.43%	-14.83%
2433	64 Neutral	¥425.11B	39.50	2.71%	2.75%	0.69%	-56.84%
2461	63 Neutral	¥30.54B	23.61		3.45%	-5.88%	15.11%
4324	50 Neutral	¥745.33B	―	-24.51%	4.83%	6.88%	-1044.58%

Dentsu Corporate Events

Dentsu Group Inc. Reports Mixed Financial Results for Q1 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.