Is Rakus (TSE:3923) Below Fair Value Following Its First Quarter Profit Jump?

Rakus (TSE:3923) drew fresh attention after reporting first quarter earnings to June 30, 2026, with sales of ¥14,210 million and net income of ¥14,631 million. Basic earnings per share reached ¥41.32.

See our latest analysis for Rakus.

Rakus shares last closed at ¥1,134, with a 30 day share price return of 18.03% and a 90 day share price return of 19.12%. However, the 1 year total shareholder return declined 13.15%, which points to improving recent momentum following the strong first quarter earnings announcement, July sales update, and news of a planned capital and business alliance with ROBOT PAYMENT Inc.

If you are curious about other opportunities benefiting from similar themes in software and automation, this could be a good moment to scan 37 robotics and automation stocks

Rakus now trades only slightly below the average analyst price target, yet sits at a steep stated discount to one fair value estimate. Is the market rightly cautious, or are investors underpricing this profit jump and alliance story?

Preferred P/E of 16.5x, Is it justified for Rakus?

Rakus closed at ¥1,134 and is flagged as trading at what looks like a reasonable level on a P/E basis, while still screening as good value against several benchmarks.

The preferred multiple here is the P/E ratio. For Rakus this is 16.5x. For a software company with established earnings, P/E gives a direct sense of what the market is paying for each unit of current profit.

Rakus is described as trading at good value compared to both peers and the wider industry. Its 16.5x P/E sits below the JP Software industry average of 17.4x and well below the peer average of 43.6x. It is also below an estimated fair P/E of 20.9x, which indicates a level that the market could potentially move towards if the company continues to support its current earnings profile.

Against that backdrop, the SWS DCF model currently points to an estimated fair value of ¥2,079.93 per share, compared with the ¥1,134 last close. This equates to a stated discount of 45.5% to this fair value estimate. That model projects future cash flows for Rakus and applies a discount rate to bring those projected cash flows back to today’s money.

For a cloud focused software business with strong historical earnings growth and an outstanding reported return on equity, that kind of DCF output reflects assumptions about continued cash generation from existing services rather than a company that is still loss making or highly speculative.

Explore the SWS fair ratio for Rakus

Result: Price-to-earnings of 16.5x (UNDERVALUED)

However, Rakus still carries risks, including its reliance on growth in its domestic cloud services and the possibility that recent share price gains could reverse if sentiment cools.

Find out about the key risks to this Rakus narrative.

Another View on Rakus Using the SWS DCF Model

The earlier P/E check suggested Rakus looks reasonably priced on earnings today. The SWS DCF model points in the same direction but with a stronger message, with an estimated fair value of ¥2,079.93 per share versus the current ¥1,134, which implies the stock screens as undervalued on this method.

This model focuses on projected cash flows rather than a simple earnings snapshot. It can flag more valuation risk if future cash generation falls short, or more potential upside if current pricing reflects too much caution around those forecasts. For investors weighing these signals side by side, the key question is which set of assumptions feels more realistic over time.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Rakus for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 25 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this mix of positives and concerns around Rakus leaves you undecided, take a close look at the full data set and move quickly to form your own view, then weigh up the 4 key rewards and 2 important warning signs

Looking for more investment ideas beyond Rakus?

If Rakus has caught your attention, now is a smart time to broaden your watchlist with other stocks that match different goals and risk levels.

• Target potential mispricing by checking companies that screen as attractively valued on earnings quality and balance sheet strength through the 25 high quality undervalued stocks.
• Strengthen your income stream by reviewing companies with higher yields and resilient cash flows in the 31 dividend fortresses.
• Dial back portfolio risk by scanning companies that earn more stable risk profiles and financial health scores using the 59 resilient stocks with low risk scores.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com