Why Did Rakuten Bank (TSE:5838) Move Today?

Rakuten Bank (TSE:5838) drew fresh attention on 6 August 2026 after it raised its earnings guidance for the fiscal year ending March 2027 and reported higher first quarter net interest income and net income.

See our latest analysis for Rakuten Bank.

Despite the raised guidance and solid first quarter update, Rakuten Bank’s recent share price moves have been mixed, with a 30-day share price return of 15.27% but a year to date share price decline of 13.67%. Over a longer horizon, the 3 year total shareholder return of 207.67% contrasts with a 1 year total shareholder return that is down 25.69%, suggesting longer term holders have still seen strong gains even as recent momentum has cooled.

If the Rakuten Bank news has you thinking about where else growth stories could emerge, this is a good moment to see what is on the radar in 12 top founder-led companies

Rakuten Bank now points to higher earnings and stronger first quarter figures, yet the share price is still below recent highs and analyst targets. Is this a quality franchise that the market is pricing generously or cautiously today?

Price-to-Earnings of 14.4x: Is it justified?

On the numbers, Rakuten Bank trades on a P/E of 14.4x, which screens as good value relative to both its own fair P/E and the wider Japanese banking sector.

The P/E ratio compares the current share price with earnings per share. For a bank like Rakuten Bank, it is a simple way to see how much investors are paying for each unit of earnings and how that compares with peers that face similar regulatory, funding and credit conditions.

In Rakuten Bank’s case, the current P/E of 14.4x is below the estimated fair P/E of 20.2x. That suggests the market is pricing its earnings at a lower level than the regression based fair value level the SWS model points to. The stock is also described as trading at good value compared with both peer companies and the broader JP Banks industry, which may signal that the market is applying a discount even though earnings have been growing.

Compared with the JP Banks industry average P/E of 15.7x and a peer average of 15.2x, Rakuten Bank trades at a cheaper earnings multiple despite recent earnings growth that exceeded both its own 5 year average and the wider industry. If market expectations shift closer to the 20.2x fair P/E level, that would represent a meaningful rerating of the stock’s earnings.

Explore the SWS fair ratio for Rakuten Bank

Result: Price-to-Earnings of 14.4x (UNDERVALUED)

However, there are clear risks for Rakuten Bank if earnings growth slows or if the current discount to analyst targets reflects concerns about future profitability.

Find out about the key risks to this Rakuten Bank narrative.

Another view on Rakuten Bank using the SWS DCF model

The P/E discussion points to Rakuten Bank looking inexpensive. The SWS DCF model paints an even stronger picture of value. It estimates fair value at ¥10,751.17 per share compared with a current price of ¥6,018, which implies the stock trades at a 44% discount.

This gap shows how sensitive valuation can be to different assumptions around future cash flows and required returns. The model indicates that valuation could differ meaningfully from the current market price. At the same time, the market might be focusing on factors such as governance, earnings sustainability or the recent share price volatility. Which perspective do you think better reflects reality today for Rakuten Bank investors?

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 Rakuten Bank 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 26 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

With mixed signals around Rakuten Bank’s valuation and outlook, this is a good moment to look through the full picture yourself and move quickly while sentiment is in flux. To weigh up both sides of the story, start with the 4 key rewards and 1 important warning sign.

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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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