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Stagwell (STGW)
NASDAQ:STGW
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Stagwell
(NASDAQ:STGW)
67Neutral
Positive Factors
Earnings
Adjusted EPS increased by 21% year-over-year, surpassing estimates by 14%, showing robust financial performance.
Revenue Growth
STGW reported strong 4Q24 performance with significant growth in advocacy revenue, increasing by 80% year-over-year.
Negative Factors
Cost Management
Continued investment in Stagwell Marketing Cloud will weigh on margins as Stagwell invests in capabilities to capture AI related project work.
Revenue Conversion Risks
Net new business disclosure suggests a record amount of revenue backlog, though historically conversion into revenue opaque.
Stagwell (STGW) vs. S&P 500 (SPY)
Market Cap
$1.58B
Dividend YieldN/A
Average Volume (3M)580.54K
Price to Earnings (P/E)307.1
Beta (1Y)2.01
Revenue Growth12.18%
EPS GrowthN/A
CountryUS
Employees11,857
SectorCommunication Services
Sector Strength78
IndustryAdvertising Agencies
Share Statistics
EPS (TTM)0.02
Shares Outstanding115,014,946
10 Day Avg. Volume608,625
30 Day Avg. Volume580,536
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.57
Price to Cash Flow (P/CF)1.90
P/FCF Ratio2.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$8.75Price Target Upside44.63% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Stagwell Business Overview & Revenue Model
Company DescriptionStagwell Inc. provides digital transformation, performance media and data, consumer insights and strategy, and creativity and communications services. The company operates through three segments: Integrated Agencies Network, Media Network, and Communications Network. It designs and builds digital platforms and experiences that support the delivery of content, commerce, service, and sales; creates websites, mobile applications, back-end systems, content and data management systems, and other digital environments; designs and implements technology and data strategies; and develops software and related technology products, including cookie-less data platforms for audience targeting and activation, software tools for e-commerce applications, and text messaging applications for consumer engagement. The company also provides media buying and planning services; and strategic insights and guidance services that offers business content, product, communications, and media strategies. In addition, it offers strategy development, advertising creation, live events, cross platform engagement, and social media content services; and leadership, social media, executive positioning and visibility, strategic communication, public relation, and public affair services. Further, the company provides influencer marketing, brand insights, communications technology, and augmented reality services for in-house marketers, as well as tech-driven solutions. Stagwell Inc. is headquartered in New York, New York.
How the Company Makes MoneyStagwell makes money primarily through its suite of marketing and communication services, which are offered to a wide range of clients across different industries. The company's revenue streams include fees for strategic consulting, creative services, and media planning and buying. Stagwell also generates income from its digital transformation services, which help clients leverage technology to improve customer engagement and operational efficiency. Additionally, the company benefits from key partnerships and acquisitions that expand its capabilities and client base, allowing it to offer integrated, data-driven marketing solutions that contribute significantly to its earnings.
Stagwell Financial Statement Overview
Summary
Stagwell demonstrates robust revenue growth and excellent cash flow management, with significant free cash flow improvement. However, profitability margins are low, and the company has high leverage, which poses risks if earnings decline.Income Statement
Stagwell has shown a steady increase in revenue, with a 12.44% growth from 2023 to 2024. The gross profit margin for 2024 is 35.13%, indicating efficient cost management. However, the net profit margin stands at a modest 0.86%, suggesting that while revenue is growing, profitability remains a challenge. The EBIT margin is 4.68%, and EBITDA margin is 3.42%, both reflecting room for improvement in operational efficiency.75
Positive
Balance Sheet
The company's debt-to-equity ratio is 2.14, highlighting a relatively high leverage which could pose risks if earnings falter. The return on equity is 3.16%, which is low, indicating limited profitability relative to shareholder equity. However, the equity ratio is 19.87%, showing that a decent portion of assets is financed by equity, providing some stability.68
Positive
Cash Flow
Stagwell's free cash flow grew significantly by 221.19% from 2023 to 2024, demonstrating strong cash generation capabilities. The operating cash flow to net income ratio is 5.82, indicating robust cash flow relative to accounting earnings. The free cash flow to net income ratio is 5.05, underscoring effective cash management.85
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.84B | 2.53B | 2.69B | 1.47B | 888.03M | Gross Profit |
| 998.24M | 906.00M | 1.01B | 562.51M | 316.44M | EBIT |
| 133.07M | 115.13M | 274.35M | 60.97M | 83.74M | EBITDA |
| 356.81M | 324.54M | 282.92M | 168.96M | 124.59M | Net Income Common Stockholders |
| 2.26M | 134.00K | 65.92M | 36.16M | 56.36M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 131.34M | 119.74M | 220.59M | 184.01M | 91.96M | Total Assets |
| 3.91B | 3.77B | 3.99B | 4.08B | 1.01B | Total Debt |
| 1.66B | 1.49B | 1.56B | 1.60B | 271.20M | Net Debt |
| 1.53B | 1.37B | 1.33B | 1.41B | 179.25M | Total Liabilities |
| 3.12B | 2.93B | 3.01B | 3.13B | 615.31M | Stockholders Equity |
| 776.90M | 356.69M | 482.54M | 381.62M | 358.76M |
| Cash Flow | Free Cash Flow | |||
| 88.85M | 38.59M | 306.78M | 147.95M | 124.09M | Operating Cash Flow |
| 142.86M | 81.01M | 348.82M | 170.57M | 138.08M | Investing Cash Flow |
| -162.47M | 155.95M | -117.51M | 141.81M | -29.02M | Financing Cash Flow |
| 36.94M | -339.86M | -186.74M | -273.41M | -80.14M |
Stagwell Technical Analysis
Negative
6.05
Price Trends
6.29
Negative
6.72
Negative
6.75
Negative
Market Momentum
-0.07
Negative
43.40
Neutral
23.69
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STGW, the sentiment is Negative. The current price of 6.05 is below the 20-day moving average (MA) of 6.09, below the 50-day MA of 6.29, and below the 200-day MA of 6.75, indicating a bearish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 43.40 is Neutral, neither overbought nor oversold. The STOCH value of 23.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STGW.
Stagwell Risk Analysis
Stagwell disclosed 38 risk factors in its most recent earnings report. Stagwell reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Stagwell Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $16.29B | 11.12 | 37.92% | 3.38% | 6.79% | 7.79% | |
73 Outperform | $23.73B | 13.08 | 16.11% | 2.69% | 8.35% | 26.60% | |
70 Outperform | $9.80B | 14.40 | 17.82% | 5.02% | -1.81% | -35.74% | |
67 Neutral | $1.58B | 307.11 | 0.66% | ― | 12.18% | ― | |
67 Neutral | $8.10B | 11.81 | 16.04% | 6.63% | 2.07% | 407.27% | |
59 Neutral | $27.87B | 0.90 | -19.24% | 4.15% | 2.11% | -44.59% | |
43 Neutral | $35.32M | ― | -145.85% | ― | -3.26% | -1829.89% |
* Communication Services Sector Average
Performance Comparison
STGW
Stagwell
6.05
0.12
2.02%
HHS
Harte-Hanks
4.59
-2.49
-35.17%
IPG
Interpublic Group of Companies
26.12
-4.64
-15.08%
OMC
Omnicom Group
79.77
-12.66
-13.70%
WPP
WPP
37.96
-6.16
-13.96%
PUBGY
Publicis Groupe SA
23.45
-2.77
-10.56%
Stagwell Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -9.84% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
Stagwell's earnings call for Q4 2024 reflected a strong year with significant revenue growth driven by Digital Transformation and Advocacy businesses. The company achieved record-breaking net new business and strategic M&A expansions. However, there are concerns about a decline in Consumer Insights and Strategy and expected headwinds in Advocacy for 2025.Highlights
Record Revenue Growth
Stagwell reported a 20% increase in revenue and 14% increase in net revenue for Q4 2024, driven by strong momentum in Digital Transformation and Performance Media and Data.
Digital Transformation Success
Digital Transformation revenue grew by 22% in Q4 and 13% for the full year, with significant AI project wins indicating a new wave of AI-driven work.
Advocacy Business Boom
Advocacy revenue in Q4 rose 80% year-over-year and 46% over the prior political cycle, driven by unprecedented political ad spend.
New Business Momentum
Stagwell posted $102 million in net new business for Q4, marking the third consecutive quarter with net new business figures exceeding $100 million.
Strategic M&A Acquisitions
Stagwell announced 11 acquisitions in 2024, including significant expansions in the Middle East, Europe, and Asia, enhancing geographical reach and capabilities.
Strong Adjusted EBITDA
Adjusted EBITDA for Q4 was $123 million, with a margin of 19.6%, and full-year adjusted EBITDA was $411 million, representing an 18% margin.
Lowlights
Consumer Insights and Strategy Decline
Consumer Insights and Strategy reported a 1% decrease in revenue for both Q4 and the full year.
Expected Advocacy Headwinds in 2025
Advocacy is expected to fall off by about 30% in 2025 due to the lack of a federal election cycle.
High Operating Expenses in Cloud Investments
Stagwell invested $23 million in cloud and AI-based software solutions in Q4, impacting short-term margins.
Company Guidance
In the earnings call for Stagwell Inc., the company provided guidance for 2025, projecting total net revenue growth of approximately 8% and an adjusted EBITDA between $410 million and $460 million. The company also anticipates a free cash flow conversion rate exceeding 45% and adjusted earnings per share ranging from $0.75 to $0.88. Stagwell expects Advocacy revenue to decline by about 30% due to the absence of a federal election cycle, while non-Advocacy sectors are forecasted to experience organic growth between 5.5% and 7.5%, driven by double-digit growth in Digital Transformation units. The company emphasized its strategic investments in cloud and AI-based solutions, highlighting a record low compensation-to-revenue ratio of 57.5% and significant progress in managing its cost structure. Stagwell's long-term margin is said to be understated due to ongoing investments, but the company is optimistic about future growth as it continues to expand its capabilities and geographical reach through strategic acquisitions and partnerships.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.