The FTSE 100 has had its share of wobblers in 2025 and advertising giant WPP (LSE: WPP) might just be one of the biggest.
The company’s share price has crashed around 53% over the past six months to 271.7p as I write on 4 November.
So, is this a screaming bargain or is the company’s low valuation justified at the moment?
What’s going on with the share price?
The company has been through a rough patch recently. It posted £14,741m in revenue for 2024, down slightly from the year before, but warned investors that more pain could be on the way. Sluggish client spending and a tougher macro climate have been weighing heavily on growth.
The company also lost some key accounts recently, which hasn’t helped its share price. Analysts have reacted to the recent news by slashing forecasts, and investors have been selling.
Valuation
On paper, WPP looks cheap. The current trailing price-to-earnings (P/E) of 7.9 is far below the wider Footsie average and its sector rivals, which often trade on multiples of 20 or more.
But there’s a reason for that. The whole industry is shifting. Traditional ad agency models are being disrupted by digital-first players, AI tools, and clients taking work in-house.
In its defence, the company says it’s adapting. That includes more investment in data, tech and simplification. But the market clearly isn’t convinced just yet.
The company’s debt looks manageable with net borrowings around £1.7bn. Its cash flow is solid, highlighted by an 86% conversion rate reported last year. That gives it some breathing room rather than a crushing debt burden.
Still, cheap doesn’t always mean good value. If profits fall further, even a low P/E can look pricey in hindsight.
My verdict
The company is one of the worst-performing FTSE 100 stocks in the last six months. I think there’s certainly an argument that it could be one for value investors to consider.
If WPP can pull off its turnaround, lean into AI and digital services, and rebuild client trust, the shares could bounce back. That low valuation might look like a steal if earnings and cash flow can significantly increase on the back of a digital- and tech-led transformation.
But if the decline continues, it may take years for the market to regain confidence. That could potentially burn investors who are a little too eager to buy.
So, while there’s potential here, it comes with plenty of risk. This could appeal to investors who back recovery stories and don’t mind a bit of volatility. But it’s not one for those who prefer steady, predictable growth.
For the moment, I think there’s too much uncertainty and it’s not one of the Footsie stocks at the top of my Buy list.
