Is There Still Upside in SoftBank After Its Strong Five Year Share Price Surge?

• If you have ever wondered whether SoftBank's share price still offers value after its big reputation swings, this breakdown will help you decide if the current level makes sense or if the easy gains are already behind it.
• Despite a recent pullback with the stock down 0.3% over the last week and 3.6% over the last month, SoftBank is still up 10.4% year to date and 113.2% over five years. This suggests that the longer term story has been far stronger than the short term noise.
• Recent headlines have focused on SoftBank's shifting portfolio strategy and ongoing moves to lean further into AI and technology infrastructure, which have helped shape how investors think about its risk and upside. At the same time, debate around the value of its underlying holdings and balance sheet strength has kept sentiment finely balanced, fueling these price swings.
• On our framework, SoftBank scores a 3/6 valuation check score, suggesting the shares screen as undervalued on some metrics but not convincingly cheap across the board. We will first walk through the usual valuation approaches before turning to a more powerful way to tie those numbers together at the end of the article.

Find out why SoftBank's 14.2% return over the last year is lagging behind its peers.

Approach 1: SoftBank Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting the cash it can return to shareholders and then discounting those future cash flows back to today in ¥ terms.

For SoftBank, the model starts from last twelve months Free Cash Flow of roughly ¥560.6 billion and uses analyst forecasts and extrapolations to project cash flows over the next decade. For example, Simply Wall St aggregates analyst estimates and extensions that imply Free Cash Flow of about ¥644.1 billion in 2026, with estimates that rise through the late 2020s and then moderate to around ¥579.2 billion by 2035 as growth slows in the second stage of the model.

Discounting this stream of cash flows under a 2 Stage Free Cash Flow to Equity framework produces an estimated intrinsic value of about ¥287.0 per share. Compared with the current share price, this implies a 24.5% discount, which indicates that the market may not be fully reflecting the cash generation implied by these projections.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests SoftBank is undervalued by 24.5%. Track this in your watchlist or portfolio, or discover 911 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 profitable companies like SoftBank, the price to earnings, or PE, ratio is a useful yardstick because it links what investors pay today to the profits the business is already generating. In general, faster earnings growth and lower perceived risk justify a higher PE, while slower growth or higher risk usually mean a lower, more conservative multiple is appropriate.

SoftBank currently trades on a PE of about 19.1x. That is a premium to both the Wireless Telecom industry average of roughly 17.6x and the broader peer group average of around 13.7x, which implies investors are already paying up for its earnings profile. Simply Wall St takes this a step further with its Fair Ratio, an estimate of what PE the market should reasonably assign given SoftBank’s earnings growth outlook, profitability, industry, size and risk factors. Because this Fair Ratio, at about 19.1x, is tailored to SoftBank’s specific characteristics, it is more informative than a simple comparison with peers or the sector, which may have very different growth and risk profiles. With the Fair Ratio closely aligned to the current PE, the shares appear roughly in line with their fundamentals on this measure.

Result: ABOUT RIGHT

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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 future with a concrete forecast and fair value estimate. A Narrative is the story you believe about the company, expressed through numbers like future revenue, margins and earnings, which then flow into an estimated fair value you can compare with today’s price to inform your decision. On Simply Wall St’s Community page, millions of investors use Narratives as an easy, accessible tool that links SoftBank’s evolving strategy in AI, fintech and digital infrastructure to dynamic forecasts that automatically refresh when new news or earnings land. With Narratives, you can explore different views. For example, a more optimistic perspective built around accelerating AI and data center growth might support a fair value near ¥270. A more cautious stance focused on competition and capital intensity could justify something closer to ¥200. You can then judge where your own assumptions fit on that spectrum.

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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