Analysts Have Made A Financial Statement On Dentsu Group Inc.'s (TSE:4324) First-Quarter Report

It's been a good week for Dentsu Group Inc. (TSE:4324) shareholders, because the company has just released its latest first-quarter results, and the shares gained 4.3% to JP¥3,172. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Following last week's earnings report, Dentsu Group's nine analysts are forecasting 2025 revenues to be JP¥1.42t, approximately in line with the last 12 months. Earnings are expected to improve, with Dentsu Group forecast to report a statutory profit of JP¥167 per share. In the lead-up to this report, the analysts had been modelling revenues of JP¥1.42t and earnings per share (EPS) of JP¥170 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

Check out our latest analysis for Dentsu Group

The consensus price target held steady at JP¥3,518, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Dentsu Group analyst has a price target of JP¥4,600 per share, while the most pessimistic values it at JP¥2,500. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 0.4% annualised decline to the end of 2025. That is a notable change from historical growth of 8.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. It's pretty clear that Dentsu Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Dentsu Group. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Dentsu Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Dentsu Group going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Dentsu Group that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.