TRADE WORKS Co.,Ltd (3997) AI Stock Analysis

• Market Cap: ¥19.33B
• Dividend Yield: 0.49%
• Average Volume (3M): 1.17M
• Price to Earnings (P/E): 294.4
• Beta (1Y): 1.12
• Revenue Growth: 14.08%
• EPS Growth: N/A
• Country: JP
• Employees: 254
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 3.26
• Shares Outstanding: 39,042,000
• 10 Day Avg. Volume: 994,900
• 30 Day Avg. Volume: 1,173,070
• PEG Ratio: -0.17
• Price to Book (P/B): 3.61
• Price to Sales (P/S): 1.00
• P/FCF Ratio: -358.39
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 52 Neutral
• Price Target: ¥551.00 ▲(19.26% Upside)

The score is primarily held back by weak financial performance: losses and negative free cash flow despite strong revenue growth. Technicals are constructive with a strong uptrend, but the stock appears overextended (RSI > 70). Valuation is a major headwind due to the extremely high P/E and low dividend yield.

Positive Factors

Revenue Growth Trend

Sustained revenue growth (+22.33% YoY) indicates the company's products/services are gaining market traction and customer adoption. Over a multimonth horizon this top-line momentum provides runway for scaling, supports targeted investment in growth, and can fund margin recovery if costs are controlled.

Operating Cash Quality

An operating cash flow to net income ratio of 1.84 shows operations convert earnings into cash at a healthy rate even with reported net losses. Durable cash conversion reduces reliance on financing, enables working capital funding and organic expansion, and cushions the business while profitability is addressed.

Manageable Leverage

A debt-to-equity ratio around 0.66 with an equity ratio near 44% implies a moderate capital structure that preserves financial flexibility. This manageable leverage supports continued investment in product development and customer acquisition while limiting immediate solvency risk through the coming months.

Negative Factors

Negative Free Cash Flow

Negative free cash flow of -13M JPY, driven by high capital spending, indicates the business is consuming cash rather than generating it. Persistent FCF deficits can deplete liquidity, restrict reinvestment and strategic options, and may force dependence on external financing if not turned positive.

Persistent Losses

Negative net margin (-3.29%) and EBIT (-1.20%) show the company remains loss-making despite revenue gains. Structural profitability weakness risks eroding retained earnings and competitiveness over time unless management improves pricing, cost structure, or shifts toward higher-margin offerings.

Declining Equity Base

A year-over-year decline in shareholders' equity points to retained losses or capital erosion, weakening the firm's capital cushion. Reduced equity increases financial vulnerability, can raise borrowing costs or constrain access to new capital, and limits strategic flexibility for longer-term initiatives.

TRADE WORKS Co.,Ltd Business Overview & Revenue Model

Company Description

TRADE WORKS Co., Ltd. provides solutions for front system exchange connection system and unfair transaction monitoring system for securities, forex margin trading (FX), and commodity futures industry. It offers TradeAgent, an Internet stock exchange system that supports various trading tools for online trading of various financial products in the securities, FX, and commodity futures fields; Dealing Athena, a solution that supports transactions and revenue management by persons in charge of self-sales department, as well as provides functions for administrators who manage transactions of each person in charge; Mars, an exchange trading terminal solution that supports securities trading; and MarsWeb, an exchange and information provider connection gateway. The company also provides MTS, an unfair trade monitoring system; and security diagnostic services. TRADE WORKS Co., Ltd. was founded in 1999 and is based in Tokyo, Japan.

How the Company Makes Money

TRADE WORKS Co., Ltd generates revenue primarily through its logistics and trade services, which encompass a range of activities including freight forwarding, customs brokerage, and warehousing. The company earns fees for each transaction processed and may also charge for additional services such as inventory management and shipping consultations. Key revenue streams include long-term contracts with businesses needing regular import/export services, one-time service fees for ad-hoc logistics needs, and commissions from partnerships with other trade-related companies. Additionally, TRADE WORKS may benefit from strategic alliances with shipping companies and local distributors that enhance its service offerings and expand its market presence.

TRADE WORKS Co.,Ltd Financial Statement Overview

Summary

Strong revenue growth (+22.33% YoY) is offset by weak profitability (negative net margin -3.29%, negative EBIT margin -1.20%) and pressured cash generation (negative free cash flow of -13M JPY). Balance sheet leverage is moderate (debt-to-equity 0.66), but declining equity adds risk.

Income Statement

The company has experienced a significant revenue growth from 2023 to 2024, with a revenue growth rate of 22.33%. However, profitability metrics are concerning, with a negative net profit margin of -3.29% for 2024 due to negative net income, and a negative EBIT margin of -1.20%. Despite positive EBITDA margin of 2.72%, the declining profitability raises concerns about operational efficiency and cost management.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio of 0.66, indicating a manageable level of debt. The equity ratio stands at 44.00%, reflecting a solid equity base relative to total assets. However, the decline in stockholders' equity from 2023 to 2024 is a potential concern, indicating challenges in retaining earnings. Overall, the balance sheet reflects moderate financial stability.

Cash Flow

Cash flow analysis reveals a concerning decline in free cash flow, which remains negative at -13 million JPY in 2024. The operating cash flow to net income ratio is positive at 1.84, suggesting that operating activities are generating cash, but the negative free cash flow growth rate and high capital expenditure could strain liquidity.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.70B	4.59B	3.75B	3.27B	2.55B	2.11B
Gross Profit	953.58M	786.15M	753.00M	832.23M	699.74M	507.24M
EBITDA	253.06M	83.21M	82.89M	415.48M	374.67M	180.61M
Net Income	-26.56M	-151.69M	-53.00M	200.30M	189.97M	73.31M
Balance Sheet
Total Assets	3.72B	2.90B	3.04B	2.18B	2.10B	1.81B
Cash, Cash Equivalents and Short-Term Investments	635.54M	804.14M	615.00M	688.29M	802.55M	836.00M
Total Debt	1.17B	848.00M	585.00M	9.69M	0.00	0.00
Total Liabilities	2.04B	1.63B	1.66B	715.46M	392.78M	278.54M
Stockholders Equity	1.68B	1.28B	1.39B	1.46B	1.71B	1.53B
Cash Flow
Free Cash Flow	0.00	-12.87M	-217.00M	390.02M	24.21M	423.11M
Operating Cash Flow	0.00	278.45M	-207.00M	399.77M	53.23M	477.78M
Investing Cash Flow	0.00	-397.30M	-404.75M	-252.60M	-78.58M	-54.84M
Financing Cash Flow	0.00	307.94M	514.00M	-261.42M	-8.10M	-9.21M

TRADE WORKS Co.,Ltd Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 462.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3997, the sentiment is Positive. The current price of 462 is below the 20-day moving average (MA) of 483.20, above the 50-day MA of 436.85, and above the 200-day MA of 272.06, indicating a bullish trend. The MACD of 17.02 indicates Positive momentum. The RSI at 57.87 is Neutral, neither overbought nor oversold. The STOCH value of 37.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3997.

TRADE WORKS Co.,Ltd Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4076	80 Outperform	¥4.98B	9.31	―	4.35%	8.71%	23.46%
3839	76 Outperform	¥5.14B	26.68	―	1.61%	7.03%	1.01%
3920	72 Outperform	¥5.31B	12.91	―	1.21%	10.06%	62.77%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
2375	61 Neutral	¥4.51B	16.11	―	0.94%	-12.25%	―
6942	56 Neutral	¥5.87B	55.20	―	―	-5.20%	133.74%
3997	52 Neutral	¥19.33B	294.42	―	0.49%	14.08%	―