Is There Still Value in SoftBank Shares After 130% Five Year Surge?

Thinking about what to do with your SoftBank stock? You’re not alone. With the share price closing at 216.1 and some eye-catching returns in recent years, it’s natural to wonder if SoftBank has more room to run or if the stock has been riding too high for too long. While the past week was a little soft, down 0.7% and the past month slipped by 5.3%, year-to-date gains are up 10.1% and the returns really shine when you zoom out: 17.8% in the last year, 69.6% over three years, and a striking 130.3% over the past five years.

What’s been driving this momentum? In part, renewed optimism around tech investments and a general uptick in risk appetite among global investors have played a role in SoftBank’s performance. There has also been talk about the shift in strategy by SoftBank’s Vision Fund, catching the attention of both critics and fans. But behind all the headlines, volatility, and debates, the big question remains: at today’s price, is SoftBank delivering real value?

That brings us to valuation. By one widely used measure, SoftBank is undervalued in just 1 out of 6 traditional checks, giving it a valuation score of 1. Of course, scores and ratios only tell part of the story. In the next section, we’ll look at these methods in depth. Later, I’ll share an even clearer lens through which to interpret SoftBank’s true worth.

SoftBank scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: SoftBank Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the intrinsic value of a company by projecting its future cash flows and discounting them back to today’s value. This approach is widely used because it focuses on the company’s ability to generate cash for shareholders over time, rather than short-term profitability or market swings.

SoftBank’s most recent reported Free Cash Flow (FCF) stands at ¥629 billion, a robust position reflecting the scale of the company. Analyst estimates suggest that FCF will trend upwards in the next few years, peaking at ¥709.9 billion by 2029. After analyst estimates end, Simply Wall St extrapolates further and projects FCF to adjust slightly downward to about ¥540 billion by 2030, with a modest decline in the following years.

Based on these projections, the DCF model calculates an estimated intrinsic value for SoftBank of ¥245.66 per share. With the current share price at ¥216.1, this indicates that the stock is trading at a 12.0% discount to its fair value. In other words, the market is currently undervaluing SoftBank according to the DCF assessment.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests SoftBank is undervalued by 12.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: SoftBank Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation tool for profitable companies like SoftBank because it directly compares the company's stock price with its bottom-line earnings. Investors look to the PE ratio as a measure of whether a stock is expensive or cheap relative to those earnings, making it especially meaningful for established businesses generating positive net income.

It is important to note that a “normal” or “fair” PE ratio is not one size fits all. Growth prospects, risk profile, profit margins, and even market sentiment all influence what investors are willing to pay for each unit of earnings. Companies with higher growth or lower risk typically command higher PE ratios, while those facing more uncertainty or slower growth tend to have lower ones.

SoftBank currently trades at a PE ratio of 20.5x. By comparison, the average for its wireless telecom industry peers is 15.8x, while the broader industry average sits at about 18.5x. Simply Wall St’s unique Fair Ratio for SoftBank is 20.0x, which reflects not only its growth outlook and profit margins but also incorporates factors such as industry dynamics, company size, and specific risks.

The benefit of Simply Wall St’s Fair Ratio is that it goes beyond generic comparisons and provides a tailored benchmark. By taking into account SoftBank’s individual growth trends, risk level, margin strength, and market positioning, the Fair Ratio paints a clearer picture of the stock’s true value potential than peer or industry averages alone.

Comparing the actual PE ratio (20.5x) to the Fair Ratio (20.0x), SoftBank is valued about right by this metric. The difference is minimal, suggesting the stock is neither notably overvalued nor undervalued at current earnings levels.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 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's introduce you to Narratives. A Narrative is simply the story or perspective an investor forms about a company, connecting what’s happening in the business to realistic financial assumptions and, ultimately, to a fair value estimate. Instead of just relying on historical ratios or analyst scores, Narratives empower you to blend what you know about SoftBank (like upcoming AI expansion or rising competition) with your own forecasts of future revenue, earnings, and margins. This produces a truly personalized view on what the shares are worth.

This approach bridges the gap between the qualitative (what’s going on inside the company, strategic moves, or market trends) and the quantitative (financial forecasts and valuation). Narratives are both easy and accessible. They are available now on Simply Wall St’s Community page, where millions of investors can share, update, and compare their views. By building a Narrative, you see where your estimated Fair Value sits versus the current market price, helping you decide when to buy or sell. Best of all, these Narratives update as new information or earnings reports come out, keeping your perspective current.

For example, some SoftBank Narratives factor in bullish assumptions such as revenue reaching ¥7,800 billion and a price target as high as ¥270, while others are more conservative, expecting challenges that justify a fair value closer to ¥200. Narratives put you in control, letting you focus on what matters most to your investment decision.

Do you think there's more to the story for SoftBank? Create your own Narrative to let the Community know!

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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