WPP plc (WPP): A Bull Case Theory

We came across a bullish thesis on WPP plc on Waterboy’s Substack by Waterboy. In this article, we will summarize the bulls’ thesis on WPP. WPP plc's share was trading at $27.60 as of July 29^th. WPP’s trailing and forward P/E were 8.32 and 5.51 respectively according to Yahoo Finance.

WPP plc (WPP), once a dominant force in global advertising, has fallen from its blue-chip pedestal, now trading near decade-lows at $29.27, a far cry from its historical highs above $120. Founded through Martin Sorrell’s 1985 acquisition and gradual empire-building, WPP became a sprawling advertising conglomerate with over 108,000 employees and $18.4 billion in annual revenue. Yet that topline figure has stagnated for years, and the company now faces structural headwinds, including AI disruption and a recent string of setbacks—most notably, dismal forward guidance and a CEO transition.

These challenges have fueled a sharp market re-rating, cutting its market cap to $6.28 billion and leaving investor sentiment in tatters. However, the market’s dismissal may overlook WPP’s enduring fundamentals. The company continues to generate robust free cash flow—projected at $1.35 billion for 2025—implying a 21.5% free cash flow yield on equity and 11.6% on enterprise value, despite $4.0 billion in net debt. WPP’s long-standing dividend discipline remains intact, with uninterrupted payouts since the 1990s averaging $2.19 over the past four years, translating to a 7.48% yield at current prices.

While growth appears moribund and uncertainty clouds the path forward, especially with digital and AI transformation reshaping the advertising landscape, WPP still offers meaningful cash returns and operational scale. If new leadership stabilizes the business or if sentiment shifts back toward value and income-generating assets, the current valuation may prove overly pessimistic. For contrarian investors, WPP might offer a compelling, if bruised, opportunity hiding beneath layers of market fatigue and disruption fears.

Previously, we covered a bullish thesis on Townsquare Media, Inc. (TSQ) by Investing 501 in April 2025, which highlighted the company’s digital transition, stable radio cash flows, and strong capital allocation. The company’s stock price has depreciated by approximately 10.4% since our coverage. This is because the thesis hasn’t yet played out. Waterboy shares a similar view but emphasizes WPP’s undervalued cash flow and dividend appeal.

WPP plc is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 9 hedge fund portfolios held WPP at the end of the first quarter which was 5 in the previous quarter. While we acknowledge the potential of WPP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.