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1. Company Snapshot

1.a. Company Description

WPP plc, a creative transformation company, provides communications, experience, commerce, and technology services in North America, the United Kingdom, Western Continental Europe, the Asia Pacific, Latin America, Africa, the Middle East, and Central and Eastern Europe.The company operates through three segments: Global Integrated Agencies, Public Relations, and Specialist Agencies.It offers plans and creates marketing and branding campaigns; designs and produces advertisements across various media; and provides media buying services, such as strategy and business development, media investment, data and technology, and content.


The company also offers public relations advisory services to clients who are seeking to communicate with a range of stakeholders from consumers to governments and the business and financial communities; and specialist agency services.WPP plc was founded in 1985 and is based in London, the United Kingdom.

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1.b. Last Insights on WPP

WPP's recent performance has been negatively impacted by several factors. The company's revised downward fair value estimate, from 4.41 to 3.72, and increased discount rate of 10.79% reflect shifting analyst perspectives on its intrinsic worth and risk profile. Weak quarterly results, with client losses affecting third-quarter performance, led to a guidance cut. The new CEO, Cindy Rose, described the performance as "unacceptable" and lacking in execution. Additionally, a reduced dividend payout and executive changes, including the retirement of COO Andrew Scott, have contributed to the negative narrative.

1.c. Company Highlights

2. WPP Delivers Mixed Results Amid Strategic Transformation

WPP reported a resilient financial performance in 2024, despite a challenging macroeconomic environment. The company achieved net revenue growth of -1%, aligning with the lower end of its guidance, driven by strong contributions from top clients, media, and production segments. The headline operating margin improved by 0.4% to 15%, reflecting cost discipline and structural savings. WPP also invested £250 million in AI and data initiatives, underscoring its commitment to future growth areas. Net debt was reduced by £0.8 billion to £1.7 billion, enhancing financial flexibility, while cash conversion improved to 86%. The company maintained its dividend payout, with a final dividend of 24.4p, keeping the total dividend for the year at 39.4p.

Publication Date: Mar -01

📋 Highlights
  • Revenue Growth and Challenges:: WPP achieved net revenue growth of -1% in 2024, meeting the lower end of guidance, driven by strong performance in media and production, but offset by significant declines in China and historical client losses. Despite macroeconomic headwinds, the company maintained stability through robust execution for top clients.
  • Margin Improvement and Investments:: The company delivered a headline operating margin of 15%, a 0.4% year-over-year improvement, supported by structural cost savings. WPP invested £250 million in AI and data initiatives, while reducing net debt by £0.8 billion to £1.7 billion, demonstrating fiscal discipline and strategic prioritization.
  • Regional and Sector Performance:: North America and the UK saw declines of 0.7% and 2.7%, respectively, while Western Europe reported mixed results. China faced significant challenges, but sectors like CPG (up 5.1%) and technology showed resilience, offsetting weaker performance in automotive (-3.3%).
  • 2025 Guidance and Strategic Focus:: WPP guided for 2025 like-for-like growth of 0% to -2%, with margins expected to remain flat. The company emphasized its strategic transformation, including the integration of WPP Open, which has improved productivity by 29% and reduced delivery times by 86%, positioning it as a leader in AI-driven marketing solutions.
  • Long-Term Outlook and Confidence:: Despite a disappointing 2024 with -1% growth, WPP remains confident in its medium-term targets of 3%+ organic growth, 16-17% margins, and 85% cash conversion. The company highlighted progress in simplification, data/technology investment, and new business wins, with a focus on returning GroupM to growth in 2025.

Regional and Sector Performance

The regional performance was mixed, with North America declining 0.7%, the UK dropping 2.7%, and Western Europe showing varied growth. China faced significant headwinds, weighing on overall results. By sector, CPG stood out with 5.1% growth, while technology showed improvement, and automotive lagged with a 3.3% decline. These results highlight the uneven recovery across industries and geographies, with certain sectors proving more resilient to economic pressures.

Strategic Progress and 2025 Outlook

WPP made notable strides in its strategic transformation, with the integration of WPP Open now used by 33,000 employees, and the consolidation of networks representing 92% of revenue. The company is leveraging AI to enhance creativity and efficiency, with a focus on end-to-end marketing solutions. For 2025, WPP guides for like-for-like growth of 0% to -2%, reflecting macro uncertainty, while margins are expected to remain flat, supported by structural cost savings and continued AI investments. The net debt/EBITDA ratio is expected to decrease toward the target range of 1.5-1.75x, signaling progress in deleveraging.

Valuation and Strategic Positioning

WPP's valuation reflects its strategic transformation efforts, with a price-to-earnings (P/E) ratio of 34.04, indicating high expectations for future growth. The dividend yield of 6.12% provides attractive income, while the free cash flow yield of 13.88% highlights strong cash generation. However, the net debt/EBITDA ratio of 5.96 remains elevated, warranting monitoring. The company's balanced business model, with exposure to creative, production, and media, positions it well to capitalize on emerging opportunities in AI and data-driven marketing.

3. NewsRoom

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British Land promoted to FTSE 100 as WPP falls out after nearly three decades

Dec -04

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FTSE 100 LIVE: London underperforms against peers as latest US data confirms Fed rate cut expectations

Dec -04

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How The Evolving Turnaround Story Is Shaping WPP’s Valuation

Dec -03

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Luma AI Opens for International Business With Former WPP Executive Jason Day Leading New London Office

Dec -02

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WPP Set to Drop Out of FTSE 100 Index After 27-Year Stint

Nov -26

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Ogury Appoints Industry Leader Nicolas Bidon as Chief Executive Officer

Nov -24

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Omnicom-IPG deal on path to close Wednesday following EU approval

Nov -24

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S4 Capital shares hit new low on profit alert

Nov -24

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.04%)

6. Segments

Global Integrated Agencies

Expected Growth: 4.73%

WPP plc's Global Integrated Agencies segment growth of 4.73% is driven by increasing demand for digital marketing services, expansion in emerging markets, and strategic acquisitions. Additionally, the company's focus on data-driven marketing, e-commerce, and content creation capabilities also contribute to its growth. Furthermore, WPP's ability to provide end-to-end solutions to clients, from creative development to media buying, enhances its competitive advantage.

Public Relations

Expected Growth: 8.37%

WPP plc's Public Relations segment growth of 8.37% is driven by increasing demand for reputation management, crisis communications, and digital PR services. The rise of social media and influencer marketing has also boosted growth. Additionally, WPP's strategic acquisitions and investments in digital capabilities have enhanced its offerings, attracting new clients and expanding existing relationships.

Specialist Agencies

Expected Growth: 4.78%

WPP plc's Specialist Agencies segment growth of 4.78% is driven by increasing demand for digital marketing services, expansion into emerging markets, and strategic acquisitions. Additionally, the segment benefits from its diversified portfolio of agencies, which provides a competitive edge in the market. Furthermore, investments in data analytics and technology enable the segment to deliver innovative solutions to clients, driving revenue growth.

7. Detailed Products

Advertising

WPP plc offers advertising services that help clients reach their target audience through various channels such as television, print, digital, and outdoor advertising.

Media Investment Management

WPP plc provides media investment management services that help clients plan, buy, and optimize their media spend across various channels.

Data Investment Management

WPP plc offers data investment management services that help clients collect, analyze, and activate their data to drive business outcomes.

Public Relations and Public Affairs

WPP plc provides public relations and public affairs services that help clients build and maintain a positive reputation and influence public policy.

Digital Transformation

WPP plc offers digital transformation services that help clients transform their businesses through digital marketing, commerce, and technology solutions.

Brand Consulting

WPP plc provides brand consulting services that help clients develop and implement brand strategies to drive business growth.

Health and Wellness

WPP plc offers health and wellness services that help clients communicate effectively with healthcare professionals and patients.

Digital Marketing

WPP plc provides digital marketing services that help clients create and execute digital marketing campaigns across various channels.

8. WPP plc's Porter Forces

Forces Ranking

Threat Of Substitutes

WPP plc operates in a highly competitive industry, and there are many substitutes available to clients. However, the company's strong brand reputation and global presence help to mitigate the threat of substitutes.

Bargaining Power Of Customers

WPP plc's clients are largely multinational corporations and governments, which have limited bargaining power due to their reliance on the company's services.

Bargaining Power Of Suppliers

WPP plc relies on a network of suppliers, including freelance creatives and technology providers. While these suppliers have some bargaining power, the company's scale and global presence help to mitigate this threat.

Threat Of New Entrants

The advertising and marketing industry has high barriers to entry, including significant capital requirements and the need for specialized skills and expertise. This limits the threat of new entrants.

Intensity Of Rivalry

The advertising and marketing industry is highly competitive, with many established players competing for market share. WPP plc faces intense rivalry from companies such as Omnicom, Interpublic, and Publicis.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 66.11%
Debt Cost 9.44%
Equity Weight 33.89%
Equity Cost 9.44%
WACC 9.44%
Leverage 195.03%

11. Quality Control: WPP plc passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Proximus

A-Score: 6.9/10

Value: 9.3

Growth: 3.4

Quality: 5.2

Yield: 9.4

Momentum: 7.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Pearson

A-Score: 6.2/10

Value: 6.4

Growth: 5.1

Quality: 7.2

Yield: 4.4

Momentum: 5.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Ströer

A-Score: 5.4/10

Value: 6.2

Growth: 5.6

Quality: 5.8

Yield: 8.1

Momentum: 1.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
JCDecaux

A-Score: 4.7/10

Value: 7.2

Growth: 4.7

Quality: 4.8

Yield: 3.1

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
WPP

A-Score: 4.6/10

Value: 8.7

Growth: 3.6

Quality: 3.5

Yield: 8.8

Momentum: 0.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
VistaPrint

A-Score: 3.0/10

Value: 6.2

Growth: 4.8

Quality: 3.9

Yield: 0.0

Momentum: 2.0

Volatility: 1.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.95$

Current Price

2.95$

Potential

-0.00%

Expected Cash-Flows