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Dentsu
(4324)
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Rating:60Neutral
Price Target:
¥3,761.00
▼(-0.45% Downside)
Action:Reiterated
Date:08/21/26
Overall score reflects a fundamentally mixed picture: strong cash flow resilience and improving operational metrics (per the earnings call) are tempered by recent net losses and moderate leverage. Technicals are supportive with positive trend and moderate momentum, while valuation is constrained by a negative P/E despite an attractive headline yield.
Positive Factors
Japan growth and margins
Japan provides a durable earnings anchor, with 13 consecutive quarters of positive organic growth and strong margins. Continued client demand and productivity gains in the home market can help offset weaker international operations.
Negative Factors
Weak and volatile profitability
Dentsu’s revenue growth has not yet translated into dependable earnings, with large losses and weak operating profitability affecting earnings quality. A sustained recovery is necessary before the business can demonstrate durable returns on revenue.
Read all positive and negative factors
Positive Factors
Negative Factors
Japan growth and margins
Japan provides a durable earnings anchor, with 13 consecutive quarters of positive organic growth and strong margins. Continued client demand and productivity gains in the home market can help offset weaker international operations.
Read all positive factors
Dentsu (4324) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
¥950.61B
Dividend Yield3.8%
Average Volume (3M)1.26M
Price to Earnings (P/E)―
Beta (1Y)0.56
Revenue Growth3.87%
EPS Growth23.48%
CountryJP
Employees67,454
SectorCommunication Services
Sector Strength97
IndustryAdvertising Agencies
Share Statistics
EPS (TTM)-800.05
Shares Outstanding265,800,000
10 Day Avg. Volume915,960
30 Day Avg. Volume1,261,200
Financial Highlights & Ratios
PEG Ratio-0.04
Price to Book (P/B)2.30
Price to Sales (P/S)0.60
P/FCF Ratio9.48
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
¥3,200.00Price Target Upside-15.30% Downside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)307.13
Revenue Forecast (FY)¥1.48T
Dentsu Business Overview & Revenue Model
Company Description
Based in Tokyo, Japan, Dentsu Group Inc. has been a leading force in the Japanese advertising industry since its inception in 1901. The company offers a comprehensive range of advertising solutions, leveraging diverse media channels such as tradit...
How the Company Makes Money
Dentsu primarily makes money by delivering marketing, advertising, and related professional services to corporate clients and charging fees and/or commissions tied to those services. Key revenue streams typically include: (1) Integrated marketing ...
Dentsu Earnings Call Summary
Earnings Call Date:Aug 14, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 18, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: clear strengths in Japan, group-level margin expansion and EPS improvement, tangible progress on cost reductions and AI-led productivity gains, and notable industry awards and client wins. Offsetting these positives are meaningful weaknesses in the Americas (notably Creative), continued CXM pressure in APAC, international organic growth lagging market levels, and one-off accounting gains masking some underlying variability. Management reiterated conservative full-year group guidance (organic 0%–1%, operating margin in the 13% range) while setting realistic midterm targets (16% operating margin by FY2028 and 2%–3% organic growth) and outlining structural and AI-focused initiatives to restore profitability.Positive Updates
Strong Japan Performance
Japan delivered organic growth of 5.4% in Q2 and c.5% for H1, marking the 13th consecutive positive quarter; Q2 net revenue reached a record high and underlying operating margin in Japan improved to 25.6% (+100 bps YoY) with underlying operating profit at a record high.
Negative Updates
Americas Weakness and Guidance Downgrade
Americas recorded a Q2 organic decline of 6.9% and a H1 organic decline of 5%; Creative in the Americas fell 18.2% in H1 (largely due to prior-year client losses and annualization effects); CXM declined 1.5% in H1; full-year Americas outlook was revised down from circa -2% to circa -4%.
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Q2-2026 Updates
Positive
Negative
Strong Japan Performance
Japan delivered organic growth of 5.4% in Q2 and c.5% for H1, marking the 13th consecutive positive quarter; Q2 net revenue reached a record high and underlying operating margin in Japan improved to 25.6% (+100 bps YoY) with underlying operating profit at a record high.
Read all positive updates
Company Guidance
Dentsu reiterated its full-year FY2026 guidance of consolidated organic growth of 0%–1% with an operating margin in the low‑teens (around 13%) and no dividend for FY2026; it revised regional forecasts to Japan just over +3% (up from ~2–3%) and the Americas to circa -4% (from ~-2%), leaving EMEA and APAC unchanged. Looking to FY2028 under the updated midterm plan, management targets a 16% operating margin and 2%–3% organic growth, plans to cut global headquarters costs by ~30% versus the FY2026 plan, to reduce ~70–80 international entities this year (with a further ~50–80 under consideration by FY2028), and has extended the deadline to eliminate loss‑making markets to FY2027. Near‑term execution metrics disclosed include: H1 consolidated organic growth 0.3%, net revenue JPY583.1bn (+3.7% YoY), underlying operating profit JPY72.0bn (+6.6%) and H1 operating margin 12.3% (up 30bps), underlying basic EPS JPY147.29 (+17.8%), JPY12.4bn spent on workforce reductions affecting just under 900 roles in the period (≈3,000 of ~3,400 planned reductions completed, 88%), JPY3.7bn of H1 internal investments, ~300 AI projects-to-date against a 1,000‑project year target, and Japan productivity gains of >107,000 hours last year (expected to exceed 200,000 hours in the current year).Dentsu Financial Statement Overview
Summary
Income Statement
34
Negative
Balance Sheet
46
Neutral
Cash Flow
62
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.47T | 1.44T | 1.41T | 1.30T | 1.25T | 1.09T |
| Gross Profit | 1.22T | 1.20T | 1.13T | 1.07T | 1.05T | 901.13B |
| EBITDA | -78.23B | -203.82B | -27.28B | 143.16B | 200.63B | 304.94B |
| Net Income | -207.68B | -327.60B | -192.17B | -10.71B | 59.85B | 108.39B |
Balance Sheet | ||||||
| Total Assets | 3.07T | 3.21T | 3.51T | 3.63T | 3.74T | 3.72T |
| Cash, Cash Equivalents and Short-Term Investments | 366.36B | 295.18B | 371.99B | 390.68B | 603.74B | 723.54B |
| Total Debt | 450.15B | 468.24B | 754.77B | 713.46B | 756.59B | 771.27B |
| Total Liabilities | 2.58T | 2.76T | 2.74T | 2.72T | 2.79T | 2.81T |
| Stockholders Equity | 424.61B | 374.85B | 696.84B | 841.65B | 880.27B | 845.03B |
Cash Flow | ||||||
| Free Cash Flow | 149.31B | 91.06B | 34.30B | 46.38B | 62.37B | 118.68B |
| Operating Cash Flow | 176.11B | 117.97B | 59.98B | 75.27B | 80.90B | 139.72B |
| Investing Cash Flow | -3.60B | -3.48B | -43.33B | -159.44B | -36.37B | 155.23B |
| Financing Cash Flow | -205.04B | -179.84B | -53.30B | -140.54B | -176.17B | -125.19B |
Dentsu Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | ¥110.92B | 19.14 | ― | 7.03% | 7.63% | 69.82% | |
69 Neutral | ¥676.90B | 15.53 | 23.16% | 1.15% | 13.74% | 77.61% | |
68 Neutral | ¥80.92B | 45.59 | ― | 2.51% | 2.33% | -51.46% | |
65 Neutral | ¥464.54B | 29.49 | 4.36% | 2.45% | -6.00% | 96.86% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
60 Neutral | ¥950.61B | -4.58 | -59.78% | 3.80% | 3.87% | 23.48% | |
43 Neutral | ¥10.42B | 5.34 | ― | ― | 10.01% | ― |
* Communication Services Sector Average
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Dentsu Corporate Events
Dentsu Delivers Strong Earnings Rebound in First Half of 2026
Aug 14, 2026
Dentsu reported consolidated revenue of ¥717.4 billion and net revenue of ¥583.1 billion for the six months ended June 30, 2026, representing year-on-year increases of 4.9% and 3.7%, respectively. Underlying operating profit rose to ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.