One-glance verdict
Undervalued
$30.02 our estimate vs market $21.95
27% below our estimate, below the bear case
Fundamentals snapshot
Dentsu Group Inc.
DNTUY · PNK · Communication Services · Advertising Agencies
Current price
$21.95
52-week range
$16.38 - $23.56
Market cap
$5.70B
Balance sheet
Watch
5.16x Adequate
Net debt $536.04M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 1.7% last year.
- Reward Free cash flow was positive in 4/10 years.
- Risk Return on equity was -34.9% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 13.7% to 7.7% over 3 years.
What this company does
Dentsu Group Inc.
Dentsu Group is a global advertising giant that helps businesses market their products through TV commercials, internet ads, billboards, and more. The company makes money by planning and creating these advertising campaigns for its clients all over the world. This means Dentsu's success often reflects how much large companies are willing to spend on marketing, which can be influenced by the health of the global economy.
How the company got here
Dentsu started in 1901 in Japan as both a news wire service and an advertising agency. It eventually focused solely on advertising, becoming the largest agency in Japan. A major turning point was the 2013 acquisition of the British company Aegis Group, which dramatically expanded its business outside of Japan and created a global network. The company is now organized as a holding company (a parent company that owns other companies) called Dentsu Group Inc., which oversees its operations in Japan and internationally.
What it actually does
Dentsu is a global advertising and public relations company that helps other businesses sell their products and manage their reputations. Think of them as the modern-day version of the agency from the show 'Mad Men'; they create advertising campaigns you might see on TV, online, or in magazines. They also help companies with their overall marketing strategy, use technology to improve customer experiences, and even get involved in major sporting events. Their clients are businesses of all sizes, from local companies to major global brands, who pay Dentsu to help them grow.
Japan Business
This is Dentsu's original and largest business, operating in its home country of Japan. It provides a full range of advertising and marketing services, including digital advertising, consulting, and promotions for clients in the Japanese market. This segment has a very strong position, particularly in television advertising, and works with many of Japan's biggest and oldest companies. It represents a very large portion of the company's overall business and profits.
International Business
This part of the company covers all business outside of Japan, operating in the Americas, Europe, the Middle East, Africa (EMEA), and the Asia-Pacific (APAC) region. It was significantly expanded through the purchase of Aegis Group and offers similar advertising and marketing services to international clients. This segment is a major part of the company's revenue (the total money it brings in), but management is currently focused on improving its profitability (the amount of that money it gets to keep as profit).
What management is betting on now
Dentsu's main focus is on becoming a more integrated and efficient global company under a 'One dentsu' strategy. They are moving away from growing by buying other companies and are instead concentrating on organic growth (growing by getting more business from new and existing clients). A key part of this is investing heavily in artificial intelligence (AI) and data technology to create more effective marketing for their clients and to make their own operations more efficient. Management is also focused on improving the performance of its international business and is reviewing underperforming units to ensure all parts of the company contribute to growth.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $30.02 vs current price $21.95
Our most-likely fair value is $30.02 a share — about 36.8% above today's price of $21.95, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Watch
Net debt $536.0M. Interest coverage 5.2x.
Net debt
$536.04M
Interest coverage
5.16x
Dentsu Group Inc.'s profit covers its interest bill about 5.2 times over. which is stronger than most peers shown here.
Watch
Worse cushion
Baseline
Better cushion
DNTUY
BASELINE
Dentsu Group Inc.
Total debt $2.88B Interest coverage 5.16x This is the baseline the peer rows are being compared against.
Total debt $9.61B Interest coverage 1.09x -79% vs DNTUY Carries about 4.8x less debt cushion than DNTUY.
Total debt $11.41B Interest coverage 1.69x -67% vs DNTUY Carries about 3.1x less debt cushion than DNTUY.
Total debt $6.25B Interest coverage 12.87x +149% vs DNTUY Carries about 2.5x more debt cushion than DNTUY.
Total debt $1.71B Interest coverage 1.65x -68% vs DNTUY Carries about 3.1x less debt cushion than DNTUY.
What you should know
The case for and against DNTUY
2 Rewards
3 Risks
Rewards
-
Revenue grew 1.7% last year.
-
Free cash flow was positive in 4/10 years.
Risks
-
Return on equity was -34.9% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 13.7% to 7.7% over 3 years.
-
Insider ownership is only 0.0% (peer median: 0.5%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
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P/B
2.04x
P/S
0.00x
EV/EBITDA
0.65x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
83.0%
Operating margin
7.7%
Net margin
-14.1%
ROE
-34.9%
ROA
3.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.93x
Current ratio
1.08x
Quick ratio
1.02x
Total debt
$2.88B
Total cash
$2.34B
Growth
How the business has been compounding
Revenue TTM
$9.40B
Revenue 5Y CAGR
4.8%
EPS TTM
-5.22
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$383.74M
Free CF TTM
$219.43M
FCF margin
2.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2024-12-31