Rakuten Group (TSE:4755): Assessing Valuation After Recent Share Price Pullback and Three-Year Rebound
Rakuten Group (TSE:4755) has been drifting lower over the past month, and that slide is starting to draw more attention from investors who remember how strongly the stock has moved over the past 3 years.
See our latest analysis for Rakuten Group.
The recent 30 day share price return of minus 11.6 percent has checked some of the enthusiasm that built earlier this year. Even so, the year to date share price return is still positive, and the three year total shareholder return of 53 percent underlines how strong the longer term comeback has been. This suggests momentum is cooling rather than collapsing as investors reassess the balance between growth prospects and leverage.
If Rakuten’s volatile rebound has you thinking about what else might be setting up for a strong run, now is a good time to explore fast growing stocks with high insider ownership.
With Rakuten still lossmaking but delivering rapid profit growth and trading at a discount to analyst targets, investors now face a key question: is this a contrarian entry point, or is the market already factoring in its recovery?
Most Popular Narrative: 8.7% Undervalued
With Rakuten Group last closing at ¥929.2 against a narrative fair value of ¥1,018.13, the current valuation leans modestly in favor of upside potential.
Analysts are assuming Rakuten Group's revenue will grow by 7.5% annually over the next 3 years.
Analysts assume that profit margins will increase from -8.8% today to 2.7% in 3 years time.
Curious how a still loss making business gets mapped to a future profit engine with a premium earnings multiple and rising margins baked in? The narrative’s core hinges on a sharp swing from red ink to meaningful profitability, powered by steady top line expansion and a valuation bar usually reserved for higher growth names. Want to see the exact earnings runway and margin lift this outlook is built on, and how it connects back to that fair value?
Result: Fair Value of ¥1,018.13 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this optimistic path could be derailed if Rakuten Mobile fails to reach profitability as expected, or if financial pressures tighten flexibility.
Find out about the key risks to this Rakuten Group narrative.
Build Your Own Rakuten Group Narrative
If you see the story differently or want to dig into the numbers yourself, you can build a customized view in just a few minutes: Do it your way.
A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Rakuten Group.
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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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