DRAFT (TSE:5070) - Share price, News & Analysis

5070 fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	0/6
Past Performance	2/6
Financial Health	5/6
Dividends	2/6

5070 Stock Overview

Draft Inc. provides design services related to space creation.

Rewards

Trading at 85.5% below our estimate of its fair value

Risk Analysis

Volatile share price over the past 3 months

Profit margins (4.4%) are lower than last year (6.9%)

Shareholders have been diluted in the past year

Does not have a meaningful market cap (¥5B)

DRAFT Competitors

Price History & Performance

Summary of all time highs, changes and price drops for DRAFT
Historical stock prices
Current Share Price	JP¥495.00
52 Week High	JP¥970.00
52 Week Low	JP¥484.00
Beta	1.99
1 Month Change	-10.81%
3 Month Change	-26.67%
1 Year Change	-48.22%
3 Year Change	n/a
5 Year Change	n/a
Change since IPO	2.06%

Shareholder Returns

	5070	JP Professional Services	JP Market
7D	-2.0%	-0.7%	-0.7%
1Y	-48.2%	-28.0%	-6.4%

Return vs Industry: 5070 underperformed the JP Professional Services industry which returned -28% over the past year.

Return vs Market: 5070 underperformed the JP Market which returned -6.4% over the past year.

Price Volatility

Is 5070's price volatile compared to industry and market?
5070 volatility
5070 Average Weekly Movement	7.3%
Professional Services Industry Average Movement	6.0%
Market Average Movement	4.2%
10% most volatile stocks in JP Market	8.5%
10% least volatile stocks in JP Market	2.3%

Stable Share Price: 5070 is more volatile than 75% of JP stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: 5070's weekly volatility (7%) has been stable over the past year, but is still higher than 75% of JP stocks.

About the Company

Founded	Employees	CEO	Website
2008	168	Taiju Yamashita	https://www.draft.co.jp

Draft Inc. provides design services related to space creation. The company is involved in office design, shop design, layout and space planning and execution, commercial building brand consulting, office relocation, and consulting for new project; furniture design, layout and space planning and execution, equipment and interior design; and import, export, and sale of furniture, office furniture, and accessories. It also offers website strategy management support, graphic design, advertisement design, and 3D and 2D design services.

DRAFT Fundamentals Summary

How do DRAFT's earnings and revenue compare to its market cap?
5070 fundamental statistics
Market Cap	JP¥4.97b
Earnings (TTM)	JP¥330.00m
Revenue (TTM)	JP¥7.44b

15.1x

P/E Ratio

0.7x

P/S Ratio

Is 5070 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
5070 income statement (TTM)
Revenue	JP¥7.44b
Cost of Revenue	JP¥5.10b
Gross Profit	JP¥2.34b
Other Expenses	JP¥2.01b
Earnings	JP¥330.00m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	32.87
Gross Margin	31.46%
Net Profit Margin	4.44%
Debt/Equity Ratio	30.4%

How did 5070 perform over the long term?

See historical performance and comparison

Dividends

1.0%

Current Dividend Yield

14%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 5070 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 5070?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 5070. This is calculated by dividing 5070's market cap by their current preferred multiple.
What is 5070's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	JP¥4.97b

5070 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.6x
Enterprise Value/EBITDA	5.8x
PEG Ratio	n/a

Price to Earnings Ratio vs Peers

How does 5070's PE Ratio compare to its peers?

5070 PE Ratio vs Peers

The above table shows the PE ratio for 5070 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	20.7x

Forward PE

Price-To-Earnings vs Peers: 5070 is good value based on its Price-To-Earnings Ratio (15.1x) compared to the peer average (20.7x).

Price to Earnings Ratio vs Industry

How does 5070's PE Ratio compare vs other companies in the Japanese Professional Services Industry?

Price-To-Earnings vs Industry: 5070 is good value based on its Price-To-Earnings Ratio (15.1x) compared to the JP Professional Services industry average (15.8x)

Price to Earnings Ratio vs Fair Ratio

What is 5070's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

5070 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	15.1x
Fair PE Ratio	n/a

Price-To-Earnings vs Fair Ratio: Insufficient data to calculate 5070's Price-To-Earnings Fair Ratio for valuation analysis.

Share Price vs Fair Value

What is the Fair Price of 5070 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 5070 (¥495) is trading below our estimate of fair value (¥3413.63)

Significantly Below Fair Value: 5070 is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate 5070's PEG Ratio to determine if it is good value.

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Future Growth

How is DRAFT forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

16.0%

Forecasted Commercial Services industry annual growth in earnings

In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as DRAFT has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.

This is quite a rare situation as 97% of companies covered by SimplyWall St do have past financial data.

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Examine whether DRAFT is trading at an attractive price based on how much it is expected to earn in the future, and relative to its industry peers and the wider market.

Past Performance

How has DRAFT performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

20.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 5070 has high quality earnings.

Growing Profit Margin: 5070's current net profit margins (4.4%) are lower than last year (6.9%).

Past Earnings Growth Analysis

Earnings Trend: 5070's earnings have grown significantly by 20.7% per year over the past 5 years.

Accelerating Growth: 5070's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 5070 had negative earnings growth (-34.8%) over the past year, making it difficult to compare to the Professional Services industry average (27.7%).

Return on Equity

High ROE: 5070's Return on Equity (11.7%) is considered low.

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Financial Health

How is DRAFT's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 5070's short term assets (¥3.5B) exceed its short term liabilities (¥910.0M).

Long Term Liabilities: 5070's short term assets (¥3.5B) exceed its long term liabilities (¥619.0M).

Debt to Equity History and Analysis

Debt Level: 5070 has more cash than its total debt.

Reducing Debt: Insufficient data to determine if 5070's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: 5070's debt is well covered by operating cash flow (145.7%).

Interest Coverage: 5070's interest payments on its debt are well covered by EBIT (51x coverage).

Balance Sheet

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Dividend

What is DRAFT current dividend yield, its reliability and sustainability?

Dividend Score

1/6

Dividend Score 1/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

1.01%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 5070's dividend (1.01%) isn’t notable compared to the bottom 25% of dividend payers in the JP market (1.7%).

High Dividend: 5070's dividend (1.01%) is low compared to the top 25% of dividend payers in the JP market (3.76%).

Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, 5070 has been paying a dividend for less than 10 years.

Growing Dividend: 5070's dividend payments have increased, but the company has only paid a dividend for 2 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (14.3%), 5070's dividend payments are thoroughly covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (4.2%), 5070's dividend payments are thoroughly covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

CEO

Taiju Yamashita (41 yo)

no data

Tenure

Mr. Taiju Yamashita is President, CEO & Representative Director of DRAFT Inc.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 8.5%.

Data	Last Updated (UTC time)
Company Analysis	2022/06/23 00:00
End of Day Share Price	2022/06/23 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31