Stagwell (STGW) AI Stock Analysis

• Market Cap: $1.46B
• Dividend Yield: N/A
• Average Volume (3M): 706.60K
• Price to Earnings (P/E): 278.7
• Beta (1Y): 1.61
• Revenue Growth: 12.18%
• EPS Growth: N/A
• Country: US
• Employees: 11,857
• Sector: Communication Services
• Sector Strength: 76
• Industry: Advertising Agencies
• EPS (TTM): 0.02
• Shares Outstanding: 115,014,946
• 10 Day Avg. Volume: 839,048
• 30 Day Avg. Volume: 706,603
• PEG Ratio: N/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 Ratio: 2.10
• 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: $8.96
• Price Target Upside: 64.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

Stagwell's stock is moderately rated due to a combination of strong revenue growth and cash flow, offset by high valuation concerns and technical bearishness. The earnings call and corporate events provide a positive outlook with strategic initiatives, but high leverage and profitability challenges remain key risks.

Positive Factors

Financial Performance

STGW reported $382 million of net new business wins, up 30% year over year, indicating strong business momentum.

Partnerships

The relationship with Adobe enhances Stagwell's relevancy for Enterprise clients, with new Joint Business Plans expected to materialize in the coming years.

Strategic Initiatives

Stagwell's virtual investor day highlighted strategic initiatives for accelerating top and bottom-line growth across all business segments.

Negative Factors

Investment Impact

Continued investment in Stagwell Marketing Cloud will weigh on margins as Stagwell invests in capabilities to capture AI related project work.

Marketing Spend

There is greater risk to near-term estimates from a potential pullback in marketing spend from clients.

Stagwell Business Overview & Revenue Model

Company Description

Stagwell 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 Money

Stagwell 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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 5.46
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 5.46 is below the 20-day moving average (MA) of 5.51, below the 50-day MA of 5.96, and below the 200-day MA of 6.65, indicating a bearish trend. The MACD of -0.19 indicates Negative momentum. The RSI at 46.52 is Neutral, neither overbought nor oversold. The STOCH value of 74.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STGW.

Stagwell Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IPG	71 Outperform	$9.16B	13.47	17.82%	5.62%	-1.81%	-35.74%
OMC	69 Neutral	$14.86B	10.14	36.50%	3.88%	5.84%	-1.17%
WPP	69 Neutral	$7.74B	11.21	16.04%	7.16%	2.07%	407.27%
CRTO	67 Neutral	$1.72B	16.59	10.43%	―	-1.22%	112.13%
STGW	66 Neutral	$1.46B	278.68	0.66%	―	12.18%	―
ZD	63 Neutral	$1.30B	23.88	3.40%	―	2.76%	58.98%
Sector *	58 Neutral	$13.14B	6.83	-2.45%	3.85%	2.36%	-36.75%

Stagwell Corporate Events

Stagwell Unveils Strategic Plan at Investor Day 2025

On April 2, 2025, Stagwell Inc. held its 2025 Virtual Investor Day, announcing a strategic plan targeting $5 billion in revenue by 2029 and $80 to $100 million in cost savings through AI-driven efficiencies. The company also plans to simplify its capital structure by converting Class C shares to Class A shares, enhancing its appeal to investors. Stagwell’s restructuring aims to align its business units with client needs and improve financial reporting. Additionally, a partnership with Palantir will enhance data capabilities, and the appointment of a Chief AI Officer will spearhead AI integration across the network.