Is It Too Late To Consider SoftBank After Its 108.4% Five Year Surge

• Wondering if SoftBank is still worth buying after its big run over the last few years, or if you might be late to the party? This breakdown will walk through whether the current price really reflects its underlying value.
• SoftBank’s share price has cooled slightly in the last week, down about 3.3%, but it is still up 10.0% year to date and an impressive 108.4% over the past 5 years. That naturally raises the question of whether the upside from here is already priced in.
• Those moves sit against a backdrop of SoftBank continuing to reposition itself around connectivity, digital services, and its stake-driven investment story, including headline-grabbing bets in tech and telecoms that have shifted how investors think about its risk profile. At the same time, ongoing portfolio reshuffles and strategic shifts have been interpreted as the group trying to simplify its structure and unlock more transparent value for shareholders.
• On our valuation framework SoftBank scores 4 out of 6, suggesting the stock screens as undervalued on most, but not all, of the key checks we run. Next we will unpack what that means across different valuation approaches, before finishing with a more intuitive way to judge whether the current market price truly matches the long term story.

Find out why SoftBank's 13.2% return over the last year is lagging behind its peers.

Approach 1: SoftBank Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes the cash that a company is expected to generate in the future, and discounts those projections back to today to estimate what the entire business is worth now. For SoftBank, the model uses a 2 Stage Free Cash Flow to Equity approach, starting from last twelve months free cash flow of roughly ¥560.6 Billion and then projecting how that figure could evolve over the next decade.

Analyst estimates underpin the earlier years, with free cash flow expected to climb to around ¥603.0 Billion by 2030, before Simply Wall St extrapolates further, assuming moderating declines after that peak. Each of these future cash flows is discounted back to present value, summed, and then divided by the number of shares to arrive at an intrinsic value of about ¥285.77 per share.

Compared with the current market price, this implies SoftBank trades at roughly a 24.5% discount, indicating the shares may be meaningfully undervalued on this cash flow view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests SoftBank is undervalued by 24.5%. Track this in your watchlist or portfolio, or discover 914 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for SoftBank.

Approach 2: SoftBank Price vs Earnings

For a profitable company like SoftBank, the price to earnings ratio is a useful way to translate the market’s expectations about future profits into a single, comparable number. In general, faster growth and lower perceived risk justify a higher PE ratio, while slower, more uncertain growth tends to cap what investors are willing to pay for each unit of earnings.

SoftBank currently trades on a PE of about 19.0x, which sits above both the Wireless Telecom industry average of roughly 17.6x and the peer group average of around 13.8x. On the surface that suggests investors are already assigning SoftBank a premium relative to sector and direct comparables.

Simply Wall St’s Fair Ratio framework goes a step further by estimating what PE multiple would make sense for SoftBank once you factor in its earnings growth outlook, profit margins, industry positioning, market cap and key risks. For SoftBank, this Fair Ratio comes out at about 19.1x, almost exactly in line with where the shares currently trade. That makes the Fair Ratio a more tailored yardstick than blunt peer or industry comparisons and implies the stock is priced broadly in line with its fundamentals today.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your SoftBank Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of SoftBank’s story with concrete numbers like future revenue, earnings, margins, and ultimately a fair value per share.

A Narrative is your own investment storyline, where you spell out what you think will drive SoftBank’s business, translate that into a financial forecast, and then see what fair value those assumptions imply, instead of relying only on static ratios like PE.

On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool to help decide when to buy or sell. They do this by comparing the fair value that falls out of their story with today’s market price. Those Narratives update dynamically as new information, such as earnings or major news, comes in.

For example, one SoftBank investor might build a bullish Narrative around accelerating AI, fintech, and semiconductor investments that supports a fair value near ¥270. Another more cautious investor might focus on competition, capex, and margin risks that lead them to a fair value closer to ¥200. Narratives make it easy to see, compare, and refine both perspectives as the data changes.

Do you think there's more to the story for SoftBank? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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