The average target price of 3923.T is 2687 and suggests 18% 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 3400.0. This translates into 49% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 2300.0. This suggests 1% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

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 has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, and there is an evident trend. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

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.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 18ppts and its growth decelerated by 2ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

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 63.5% 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 42.9% 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 80.7%, again ahead of the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 4.9 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. 

Considering past and projected metrics, the stock is distinctly 'expensive' compared to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

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Rakus Co., Ltd.

¥ 2314

5

Rakus Co., Ltd.

¥ 2314

5

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Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 2314

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