Dentsu (4324) AI Stock Analysis

Compare

2 Followers

Top Page

Dentsu

(OTC:4324)

Rating:54Neutral

Price Target:

¥3,147.00

▲(2.18%Upside)

Dentsu's overall stock score reflects its strong cash flow generation and positive developments in Japan. However, persistent profitability challenges, negative international growth, and valuation concerns weigh on the score. The dividend yield provides some valuation support, but operational improvements are necessary to enhance the financial outlook.

Dentsu (4324) vs. iShares MSCI Japan ETF (EWJ)

Market Cap

$802.28B

Dividend Yield4.21%

Average Volume (3M)990.02K

Price to Earnings (P/E)―

Beta (1Y)0.85

Revenue Growth6.88%

EPS Growth-1044.58%

CountryJP

Employees67,667

SectorCommunication Services

Sector Strength83

IndustryAdvertising Agencies

Share Statistics

EPS (TTM)24.15

Shares Outstanding265,800,000

10 Day Avg. Volume1,001,740

30 Day Avg. Volume990,020

Financial Highlights & Ratios

PEG Ratio-9.97

Price to Book (P/B)1.22

Price to Sales (P/S)0.00

P/FCF Ratio5.89

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$3,099.46

Price Target Upside0.63% 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 Earnings Call Summary

Earnings Call Date:May 15, 2025

(Q1-2025)

% Change Since: -2.13%|

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 is challenged by negative net income and EBIT margins, despite modest revenue growth. The balance sheet shows moderate leverage but declining equity, and cash flow generation is mixed. Profitability improvement is crucial for better financial health.

Income Statement

Neutral

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

Neutral

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.

Cash Flow

Neutral

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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
	EBIT
-118.54B	-124.99B	128.73B	194.43B	150.95B	103.04B
	EBITDA
195.67B	-29.60B	139.50B	241.90B	302.49B	-32.61B
	Net Income Common Stockholders
-191.46B	-192.17B	-10.71B	59.85B	108.39B	-152.29B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
315.17B	397.19B	390.68B	622.47B	743.00B	542.85B
	Total Assets
3.26T	3.51T	3.63T	3.74T	3.72T	3.38T
	Total Debt
562.80B	547.27B	713.46B	532.43B	579.19B	584.81B
	Net Debt
247.63B	175.28B	322.79B	-71.31B	-144.35B	54.12B
	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

Technical Analysis Sentiment

Negative

Last Price3080.00

Price Trends

50DMA

3068.70

Positive

100DMA

3248.64

Negative

200DMA

3729.52

Negative

Market Momentum

MACD

12.88

Positive

RSI

48.46

Neutral

STOCH

25.85

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 3080 is below the 20-day moving average (MA) of 3111.65, above the 50-day MA of 3068.70, and below the 200-day MA of 3729.52, indicating a neutral trend. The MACD of 12.88 indicates Positive momentum. The RSI at 48.46 is Neutral, neither overbought nor oversold. The STOCH value of 25.85 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

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$14.20B	5.93	-4.31%	3.70%	2.75%	-35.73%
4324	54 Neutral	$802.28B	―	-24.51%	4.21%	6.88%	-1044.58%
CYAGF		$5.22B	27.55	14.25%	1.33%	―	―
HKUOF		$2.92B	36.51	2.71%	3.02%	―	―
4293	77 Outperform	¥81.13B	22.54		8.10%	-17.46%	43.19%
2491	67 Neutral	¥25.88B	5.94		7.12%	5.36%	32.46%
2461	63 Neutral	¥28.02B	21.66		4.49%	-5.88%	15.11%

* Communication Services Sector Average

Performance Comparison

JP:4324

Dentsu

3,080.00

-818.35

-20.99%

CYAGF

CyberAgent

8.78

2.68

43.93%

HKUOF

Hakuhodo Dy Holdings

7.02

-0.01

-0.14%

JP:2461

FAN Communications. Inc.

428.00

36.77

9.40%

JP:2491

ValueCommerce Co., Ltd.

796.00

-308.98

-27.96%

JP:4293

Septeni Holdings Co., Ltd.

389.00

64.52

19.88%

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

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.