The average target price of 3923.T is 2546 and suggests 19% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 3000.0. This translates into 40% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 2100.0. This is equivalent to 2% downside potential in the worst case. 

Rakus Co., Ltd. provides cloud and IT outsourcing services. It offers cloud products, such as Raku Raku Seisan, Raku Raku Meisai, Mail Dealer, Raku Raku Hambai, Hai Hai Mail, and Blastmail, as well as dispatches IT engineers. The company was incorporated in 2000 and is headquartered in Tokyo, Japan.

Japan

Rakus Co., Ltd.

Technology

The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. 

3923.T reported revenue of JPY 48 904mn in the last 12 months, up 6% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 43% from FY24 to JPY 44.18. Market expects EPS to reach JPY 42.66 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 7ppts over past six months and grown 5ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 23.1% in the last 12 months, up from 22.9% in FY24. 

Historically, 3923.T has reported strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 16.4%, a growth from 15.8% in FY24. 

Rakus Co., Ltd. reported a return on equity (RoE) of 39.4% in the last 12 months, down from 48.1% in FY24. The market consensus projects an RoE of 84.4% in FY25, again ahead of its peers. 

Another important profitability metric, return on assets (RoA), amounted to 27.6% in the last 12 months, a decrease from 32.5% in FY24. The market analysts predict that RoA will be 60.0% in FY25, again stronger than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 38.9%, above the peers. The consensus estimate for FY25 for RoCE is 109.0%, again ahead of the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 4.8 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

3923.T boasts high trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually very stable and remains favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 

No other major risks have been identified.

The risk of default is minimal. We note resilient historical revenue growth, solid return on capital, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, poor working capital management.

In highly turbulent market conditions, 3923.T is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, 3923.T is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from large to substantial. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. In particular, the stock is overpriced on P/E, 'expensive' on EV/EBITDA, overvalued on P/FCF. 

Rakus Co., Ltd.

¥ 2171

5

Rakus Co., Ltd.

¥ 2171

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 2171

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