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WPP (GB:WPP)
LSE:WPP

WPP (WPP) AI Stock Analysis

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GB

WPP

(LSE:WPP)

66Neutral
WPP's overall stock score reflects solid operational efficiency and strategic investments in AI, but is tempered by challenges in revenue growth and high leverage. The stock's bearish technical indicators and cautious earnings call sentiment indicate potential risks. However, its reasonable valuation and high dividend yield provide some upside potential for investors.
Positive Factors
Business Expansion
Net new business wins of $3.2bn YTD set a better base for 2025; important wins in Q3 were highlighted by the Amazon EMEA and APAC business, and the retention of Unilever global media and creative.
Debt Reduction
The sale of FGS to be completed in Q4 brings in £600m in cash, which will reduce net debt/EBITDA ratio to the 1.5-1.7x target range.
Negative Factors
Earnings Outlook
Weak 2025 guidance with a 6% EPS cut on the cards.
Industry Trends
A big slowdown within CPG echoing recent comments from advertisers such as P&G which mentioned greater savings on agency fees of late, driven by in-housing.
Revenue Performance
WPP FY24 results and FY25 outlook look disappointing, particularly on the revenue side.

WPP (WPP) vs. S&P 500 (SPY)

WPP Business Overview & Revenue Model

Company DescriptionWPP 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.
How the Company Makes MoneyWPP generates revenue primarily through providing marketing communications services to clients worldwide. The company's key revenue streams include fees from advertising campaigns, media planning and buying services, public relations consultancy, and data analytics services. WPP also earns from its branding and identity services, as well as digital and e-commerce solutions. A significant portion of WPP's income comes from long-term contracts and relationships with major global brands. The company often engages in strategic partnerships and acquisitions to enhance its service offerings and expand its global footprint, which also contributes to its revenue growth.

WPP Financial Statement Overview

Summary
Income Statement
Balance Sheet
Cash Flow
Breakdown
TTMDec 2023Dec 2022Dec 2021Dec 2020Dec 2019
Income StatementTotal Revenue
14.85B14.84B14.43B12.80B12.00B13.23B
Gross Profit
2.49B2.52B2.54B2.20B2.01B2.41B
EBIT
647.90M531.00M1.36B1.23B2.28B1.30B
EBITDA
908.00M1.83B2.03B1.78B-1.85B1.61B
Net Income Common Stockholders
203.40M110.40M682.70M637.70M-2.97B844.10M
Balance SheetCash, Cash Equivalents and Short-Term Investments
2.22B2.22B2.49B3.88B12.90B11.31B
Total Assets
26.62B26.62B28.82B27.87B36.17B39.58B
Total Debt
6.88B6.88B7.18B6.83B15.75B15.10B
Net Debt
4.66B4.66B4.69B2.94B2.85B4.65B
Total Liabilities
22.79B22.79B24.66B23.80B31.12B31.29B
Stockholders Equity
3.38B3.38B3.68B3.62B4.73B7.93B
Cash FlowFree Cash Flow
963.80M1.02B477.60M1.74B1.78B1.51B
Operating Cash Flow
1.14B1.24B700.90M2.03B2.05B1.85B
Investing Cash Flow
-202.40M-380.40M-408.90M-638.40M-163.40M1.76B
Financing Cash Flow
-432.10M-904.70M-1.91B-2.06B-250.50M-2.92B

WPP Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
GBSAA
67
Neutral
£197.45M13.3633.73%0.97%-12.89%
GBWPP
66
Neutral
£5.35B9.8615.82%7.94%-0.70%388.07%
58
Neutral
$26.94B3.15-10.67%4.32%2.14%-43.11%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:WPP
WPP
525.80
-199.46
-27.50%
GB:SAA
M&C Saatchi plc
162.50
-13.06
-7.44%

WPP Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: -31.73% | Next Earnings Date: Aug 1, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were significant achievements in strategic transformation, margin improvement, and debt reduction, these were offset by challenges in net revenue decline, China market difficulties, and declines in creative and public relations segments. The sentiment remains cautious due to macroeconomic uncertainties and regional performance weaknesses.
Highlights
Strategic Transformation Progress
The company made significant progress in strategic transformation, including investment in WPP Open and a stronger balance sheet. Strong strategic progress, better new business performance in the second half, and improved cash conversion were noted.
Operating Margin Improvement
Headline operating margin improved to 15%, up 40 basis points year-on-year, benefiting from structural cost savings and disciplined cost management.
Debt Reduction
Year-end net debt reduced to GBP 1.7 billion, a GBP 0.8 billion reduction year-on-year, aided by strong working capital management and the sale of FGS Global.
AI and Data Investment
Significant investment in AI and data (GBP 250 million) with a focus on enhancing tools and deployment across teams. Incremental P&L investment of over GBP 30 million was made.
Client Growth and Retention
Top 10 clients grew 2.8% throughout the year, and the top 25 clients grew 2%, indicating strong client retention and growth.
Successful New Business Wins
Improved new business performance in the second half with wins including Amazon, J&J, and Unilever.
Lowlights
Net Revenue Decline
Net revenue growth came in at minus 1%, consistent with the lower end of guidance range, impacted by historical client losses and weaker discretionary spend.
China Market Challenges
Challenging trends in China led to an 80 basis point drag, with a significant decline in performance expected to continue in the first half of 2025.
Decline in Creative Agencies
Global integrated creative agencies saw a like-for-like decline of 3.9% in 2024, driven by the loss of a healthcare client assignment and continued weakness in project-based work.
Public Relations Decline
Public Relations saw a like-for-like decline of 1.7% in 2024, with performance impacted by the loss of healthcare client assignments and a challenging environment for client discretionary spend.
Regional Performance Weakness
North America declined by 0.7%, the United Kingdom by 2.7%, and the rest of world by 2.6%, largely driven by macroeconomic pressures and client loss impacts.
Increased Finance Costs
Net finance costs increased to GBP 280 million due to higher interest rates following bond refinancing.
Company Guidance
In the call, the guidance for 2025 highlighted several key metrics and strategic priorities. The company reported a net revenue decline of 1% in 2024, which was at the lower end of their guidance range due to challenging trends, particularly in China, and weaker discretionary spending. Despite these challenges, they achieved a stronger headline operating margin of 15%, up 40 basis points year-on-year, supported by structural cost savings and disciplined cost management. Investment in AI and data saw a GBP 250 million commitment, with an additional GBP 30 million incrementally over the year. The company's strategic focus includes driving efficiency and effectiveness through their WPP Open platform, which has seen significant adoption and is expected to further enhance productivity and client engagement. For 2025, they anticipate like-for-like revenue ranging from flat to a decline of 2%, with margins expected to remain flat. The company also aims to improve cash conversion, which was 86% in 2024, alongside reducing net debt, which stood at GBP 1.7 billion at year-end. The strategic outlook for 2025 emphasizes leveraging AI, data, and technology to deliver better client outcomes, with continued focus on simplifying the organization and enhancing collaboration.

WPP Corporate Events

M&A TransactionsBusiness Operations and Strategy
WPP Acquires InfoSum to Boost AI-Driven Data Offerings
Positive
Apr 3, 2025

WPP has acquired InfoSum, a leading data collaboration platform, to enhance its AI-driven data offerings. This strategic move aims to provide WPP clients with access to a vast network of privacy-safe, actionable data, enabling them to maximize the value of their first-party data and improve marketing intelligence. The acquisition integrates InfoSum’s technology into WPP’s infrastructure, allowing for the development of AI-enhanced marketing solutions and providing clients with a competitive advantage in the AI era. This move is expected to significantly impact WPP’s operations by expanding its data capabilities and offering clients improved campaign performance and audience targeting.

Regulatory Filings and Compliance
WPP Announces Total Voting Rights and Capital Update
Neutral
Apr 1, 2025

WPP has announced its total voting rights and capital as of March 31, 2025, revealing that it has 1,091,394,251 ordinary shares, with 12,591,893 held in Treasury. This results in a total of 1,078,802,358 voting rights, a figure important for shareholders to determine their notification requirements under FCA rules.

Financial DisclosuresRegulatory Filings and Compliance
WPP Files 2024 Annual Report with SEC
Neutral
Mar 28, 2025

WPP has announced the filing of its 2024 Annual Report on Form 20-F with the Securities and Exchange Commission, which includes audited financial statements for the year ending December 31, 2024. This filing is significant as it provides transparency and detailed financial insights to shareholders and stakeholders, reinforcing WPP’s commitment to maintaining strong corporate governance and investor relations.

Shareholder MeetingsBusiness Operations and StrategyFinancial Disclosures
WPP Publishes 2024 Annual and Sustainability Reports, Emphasizes AI and Risk Management
Positive
Mar 28, 2025

WPP has released its Annual Report for 2024 and Sustainability Report, alongside the 2025 Notice of Annual General Meeting. The reports highlight the company’s strategic focus on leveraging AI and technology to drive growth and efficiency, while addressing economic and geopolitical risks. The company is committed to maintaining resilience through diverse client portfolios and proactive risk management strategies, aiming to enhance its market position and stakeholder confidence.

Business Operations and StrategyRegulatory Filings and Compliance
WPP PLC Announces Change in Voting Rights Structure
Neutral
Mar 25, 2025

WPP PLC has announced a change in its voting rights structure following an acquisition or disposal of voting rights by T. Rowe Price Associates, Inc., a U.S.-based investment management firm. As of March 20, 2025, T. Rowe Price Associates holds 5.134552% of WPP’s voting rights, which represents a significant stake in the company. This change in voting rights could impact WPP’s governance and decision-making processes, potentially influencing its strategic direction and operations.

Executive/Board ChangesBusiness Operations and Strategy
WPP Announces Vesting of Executive Share Awards
Neutral
Mar 18, 2025

WPP announced the vesting of executive share awards under the 2022 Executive Performance Share Plan, with key executives Mark Read and Andrew Scott acquiring and subsequently selling shares to cover statutory withholding liabilities. This transaction highlights the company’s commitment to performance-based incentives and may impact its market positioning by aligning executive interests with shareholder value.

Executive/Board ChangesBusiness Operations and Strategy
WPP Announces Executive Performance Share Awards for 2025
Neutral
Mar 14, 2025

WPP has announced the granting of Executive Performance Share Awards to its top executives, including the CEO, CFO, and COO, as well as other senior executives within the company. These awards, which are in the form of nil-cost options or conditional performance shares, will vest based on the company’s performance from 2025 to 2027, measured by Return on Invested Capital, Adjusted Free Cash Flow, and Total Shareholder Return. This initiative is part of WPP’s strategy to align executive compensation with company performance, potentially impacting stakeholder value and company operations.

Executive/Board Changes
WPP Announces Vesting of Executive Share Awards
Neutral
Mar 12, 2025

WPP has announced the vesting of executive share awards for key personnel, including CEO Mark Read, COO Andrew Scott, and CFO Joanne Wilson, under the 2022 Executive Share Award and the WPP Stock Plan 2018. The transactions, which took place on 10 March 2025, involved the acquisition and partial sale of shares to cover statutory withholding liabilities, reflecting the company’s ongoing commitment to aligning executive incentives with performance metrics.

Business Operations and StrategyFinancial Disclosures
WPP Reports Strategic Progress and Enhanced AI Investment in 2024 Results
Positive
Feb 27, 2025

WPP’s 2024 preliminary results highlight strategic progress with improved margins and cash conversion despite revenue pressures. The company has increased its investment in AI through WPP Open, which has been widely adopted, enhancing operational efficiency and client service. WPP’s strategic initiatives, including a simpler client-facing structure and enhanced media offerings, aim to strengthen client relationships and drive business growth, with a focus on innovation and operational excellence.

Financial Disclosures
WPP to Announce 2024 Preliminary Results on February 27, 2025
Neutral
Feb 12, 2025

WPP has announced that its preliminary financial results for the year ending December 31, 2024, will be released on February 27, 2025. The announcement will be accompanied by a presentation for investors and analysts, which will be webcast live, reflecting WPP’s commitment to transparency and stakeholder engagement.

Regulatory Filings and Compliance
WPP Announces Updated Share Capital and Voting Rights
Neutral
Feb 3, 2025

WPP PLC announced that as of January 31, 2025, its issued share capital consisted of 1,091,394,251 ordinary shares, with 12,591,893 shares held in treasury. This results in a total of 1,078,802,358 voting rights, a key figure for shareholders under the FCA’s rules. This update is critical for shareholders to determine their stake in the company and maintain compliance with regulatory requirements.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.