Is There Now An Opportunity In Dentsu Group Inc. (TSE:4324)?

While Dentsu Group Inc. (TSE:4324) might not have the largest market cap around , it saw significant share price movement during recent months on the TSE, rising to highs of JP¥4,333 and falling to the lows of JP¥3,890. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Dentsu Group's current trading price of JP¥4,251 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Dentsu Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Dentsu Group

What's The Opportunity In Dentsu Group?

According to our valuation model, Dentsu Group seems to be fairly priced at around 16% below our intrinsic value, which means if you buy Dentsu Group today, you’d be paying a reasonable price for it. And if you believe the company’s true value is ¥5059.00, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Dentsu Group’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Dentsu Group generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With revenues expected to grow by a double-digit 12% over the next couple of years, the outlook is positive for Dentsu Group. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 4324’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on 4324, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Dentsu Group as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Dentsu Group and we think they deserve your attention.

If you are no longer interested in Dentsu Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.