One-glance verdict
Undervalued
$14.82 our estimate vs market $8.67
Wall Street consensus: $9.86 (-33.5% lower than our fair-value estimate)
41% below our estimate, below the bear case
Fundamentals snapshot
Stagwell Inc.
STGW · NMS · Communication Services · Advertising Agencies
Current price
$8.67
52-week range
$4.29 - $9.55
Market cap
$2.12B
Balance sheet
Distressed
1.65x Concerning
Net debt $1.60B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 4.5% last year.
- Reward Returns 2.4% on equity, ahead of 20% of its peers.
- Risk Net debt grew 12.5% over 3 years.
- Risk Operating margin compressed from 10.5% to 2.6% over 3 years.
What this company does
Stagwell Inc.
Stagwell is a modern advertising agency that helps other businesses market and sell their products using digital tools and creative campaigns. The company makes money by charging clients for a wide range of services, from building websites and managing social media to protecting a company's public reputation. Stagwell's success is tied to how much other businesses are willing to spend on digital marketing, which has become essential for reaching customers today.
How the company got here
Stagwell was started in 2015 by political strategist Mark Penn, with a large investment from former Microsoft CEO Steve Ballmer, to build a modern marketing company for the digital age. [1, 3, 6] It grew by buying various marketing and advertising agencies, each with its own specialty. [3] A major turning point was in 2021 when it merged with another large marketing group, MDC Partners, which significantly increased its size and capabilities. [1, 2] This merger transformed Stagwell into one of the top global marketing networks, positioning it as a faster, more tech-savvy challenger to the industry's older giants. [2, 6]
What it actually does
Stagwell is a collection of over 70 different marketing agencies that help other companies sell their products and manage their reputations. [1, 6] Think of them as a toolbox for big brands like Google, Amazon, and Budweiser. [1, 16] If a company wants to create a new TV commercial, run ads on social media, understand what customers are thinking through research, or manage a public relations crisis, they can hire one of Stagwell's specialized agencies to do the work. [2, 12] Stagwell's goal is to offer all the marketing services a big company might need under one roof, with a special focus on using data and technology. [4, 11]
Marketing Services
This is Stagwell's largest segment, making up about 40% of its business. [17] It's the creative heart of the company, focused on big, imaginative ideas and brand-building. The agencies in this division are the ones that create the advertising campaigns you see on TV or online, design a company's logo and branding, and produce live events and experiences for brands like Walmart and Unilever. [8] Companies pay this segment to develop the core message and feel of their brand to connect with customers on an emotional level. [12]
Media & Commerce
Making up about a quarter of the company's revenue (the money it brings in before expenses), this segment is all about placing ads in the right places to get the best results. [17] After the creative teams in Marketing Services make an ad, the Media & Commerce teams decide where and when it should run, whether that's on TV, a website, or a social media feed. They use data to figure out the most effective way to spend a client's advertising budget. This part of the business also helps clients sell their products directly online, a practice known as e-commerce. [2]
Communications
This segment, which is a little less than a fifth of the business, helps companies manage their public image and communicate with the world. [17] This includes public relations (or PR, which is getting the media to talk about a company in a positive way) and public affairs, which involves dealing with government and policy issues. [2] For example, if a company has good news to share, or is facing a difficult situation, it would hire agencies from this segment to help manage the story. This division also includes political consulting and advocacy work, helping organizations influence public opinion. [12]
Digital Transformation
This is a fast-growing part of Stagwell, representing about 15% of its revenue. [17, 18] This segment helps clients update their business for the internet age. This isn't just about advertising; it's about building the technology that companies use to interact with their customers, like creating websites, mobile apps, and online shopping platforms. [1, 2] Companies pay this group to design and build the digital tools they need to operate and grow their business online. [12]
The Marketing Cloud
This is Stagwell's smallest but most technology-focused segment, making up a small slice of the company's revenue. [17] Instead of providing services done by people, this division builds and sells software that companies can use themselves. These tools, often sold as a subscription (SaaS, or Software-as-a-Service), help a company's own marketing team manage their work more efficiently. [13] For example, they offer software that uses artificial intelligence to help with public relations or to analyze marketing data. [5]
What management is betting on now
Stagwell's leadership is heavily focused on artificial intelligence (AI), believing it will transform the marketing industry. [15, 21] They are building and buying technology to create AI-powered tools that can make marketing cheaper and more effective for their clients. [21] The company also continues to grow by making acquisitions (buying other companies) to expand into new regions and add new capabilities, especially in high-growth areas like sports and entertainment marketing. [7, 8, 9] The overall strategy is to combine creative talent with cutting-edge technology to win business from larger, slower-moving competitors. [2]
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-4.35M
FY2024 Q4
$209.91M
FY2025 Q1
$-63.92M
FY2025 Q2
$107.07M
FY2025 Q3
$-38.77M
FY2025 Q4
$242.91M
FY2026 Q1
$-37.15M
FY2026 Q2
$79.25M
Revenue
$786.31M
Net income
$-8.12M
Diluted EPS
—
Operating cash flow
$90.20M
Free cash flow
$79.25M
Fetching…
Sources
Revenue
$704.14M
Net income
$-12.97M
Diluted EPS
—
Operating cash flow
$-26.49M
Free cash flow
$-37.15M
Fetching…
Sources
Revenue
$807.44M
Net income
$12.66M
Diluted EPS
—
Operating cash flow
$260.31M
Free cash flow
$242.91M
Fetching…
Sources
Revenue
$743.00M
Net income
$24.62M
Diluted EPS
—
Operating cash flow
$-24.02M
Free cash flow
$-38.77M
Fetching…
Sources
Revenue
$706.82M
Net income
$-5.26M
Diluted EPS
—
Operating cash flow
$114.75M
Free cash flow
$107.07M
Fetching…
Sources
Revenue
$651.74M
Net income
$-2.92M
Diluted EPS
—
Operating cash flow
$-60.01M
Free cash flow
$-63.92M
Fetching…
Sources
Revenue
$788.71M
Net income
$3.23M
Diluted EPS
—
Operating cash flow
$212.09M
Free cash flow
$209.91M
Fetching…
Sources
Revenue
$711.28M
Net income
$3.27M
Diluted EPS
—
Operating cash flow
$-1.61M
Free cash flow
$-4.35M
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Sources
Is it cheap or expensive?
Fair value $14.82 vs current price $8.67
Wall Street consensus is the average analyst price target: $9.86 (-33.5% lower than our fair-value estimate).
Our most-likely fair value is $14.82 a share — about 70.9% above today's price of $8.67, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $1.6B. Interest coverage 1.7x.
Net debt
$1.60B
Interest coverage
1.65x
Stagwell Inc.'s profit covers its interest bill about 1.7 times over. which is weaker than most peers shown here.
Distressed
Worse cushion
Baseline
Better cushion
STGW
BASELINE
Stagwell Inc.
Total debt $1.71B Interest coverage 1.65x This is the baseline the peer rows are being compared against.
Total debt $11.41B Interest coverage 1.69x +2% vs STGW Has roughly the same debt cushion as STGW.
Total debt $416.98M Interest coverage 5.17x +212% vs STGW Carries about 3.1x more debt cushion than STGW.
Total debt $894.54M Interest coverage 7.07x +327% vs STGW Carries about 4.3x more debt cushion than STGW.
Total debt $111.83M Interest coverage 45.70x +2,664% vs STGW Carries about 27.6x more debt cushion than STGW.
What you should know
The case for and against STGW
3 Rewards
2 Risks
Rewards
-
Revenue grew 4.5% last year.
-
Returns 2.4% on equity, ahead of 20% of its peers.
-
Free cash flow was positive in 8/10 years.
Risks
-
Net debt grew 12.5% over 3 years.
-
Operating margin compressed from 10.5% to 2.6% over 3 years.
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)
144.50x
Forward P/E
7.01x
P/B
3.17x
P/S
0.70x
EV/EBITDA
11.60x
PEG ratio
0.38x
Profitability
How much profit each dollar creates
Gross margin
35.8%
Operating margin
2.6%
Net margin
0.5%
ROE
2.4%
ROA
2.2%
Health
Liquidity and balance-sheet strength
Debt / equity
2.41x
Current ratio
0.81x
Quick ratio
0.66x
Total debt
$1.71B
Total cash
$109.47M
Growth
How the business has been compounding
Revenue TTM
$3.04B
Revenue 5Y CAGR
18.6%
EPS TTM
0.06
EPS 5Y CAGR
-22.2%
Cash flow
How much cash the business throws off
Operating CF TTM
$300.01M
Free CF TTM
$247.29M
FCF margin
8.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
—