Ever wondered if SAP is really offering good value, or if there is something under the surface investors are missing?
After a remarkable multi-year run, with the stock up over 100% in the last three years, SAP shares have dipped 12.2% over the past month and are down 13.4% year-to-date. This has sparked renewed debate about what comes next.
Recent headlines show growing interest in SAP’s AI integrations and expanded global partnerships. These factors have kept sentiment buoyant even amid the recent price pullback. Industry analysts are watching closely to see if these initiatives translate into sustained competitive advantages.
Based on Simply Wall St’s valuation checks, SAP earns a score of 3 out of 6 for undervaluation, placing it right in the middle of the pack. Next, let’s dive deeper into the valuation process itself. Stay tuned as we also share a smarter way to look at value towards the end of the article.
SAP delivered -5.3% returns over the last year. See how this stacks up to the rest of the Software industry.
The Discounted Cash Flow (DCF) model projects SAP’s future cash flows and then discounts them back to today’s value, providing an estimate of the company’s value. This method uses both analyst forecasts and data-driven extrapolations to look ahead, helping investors understand the long-term earning potential of the business.
SAP’s latest reported Free Cash Flow is just over €6.4 Billion. Analysts expect this figure to increase steadily, with projections reaching about €9.6 Billion by 2027. Using Simply Wall St’s methodology, longer-term estimates are developed, forecasting Free Cash Flow to rise beyond €16.9 Billion by 2035. These projections are intended to offer a reliable view of SAP’s earnings profile over the coming decade.
Based on these cash flow projections, the DCF model calculates SAP’s intrinsic value at €253.82 per share. This is nearly 18.6% higher than its current price, suggesting the market may be underestimating SAP’s future cash generation potential and ongoing investment in AI and global partnerships.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests SAP is undervalued by 18.6%. Track this in your watchlist or portfolio, or discover 926 more undervalued stocks based on cash flows.
SAP Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for SAP.
For established, profitable companies like SAP, the Price-to-Earnings (PE) ratio is often a key metric for valuation. It shows how much investors are willing to pay today for a Euro of SAP’s current earnings, making it a particularly meaningful gauge when the business is generating consistent profits.
Growth prospects and risk factors play a significant role in determining what is considered a “normal” or fair PE ratio. If a company is expected to grow faster or faces less risk than its peers, investors will generally pay a higher multiple for its stock. Conversely, slower growth or above-average risks are typically associated with a lower PE ratio.
Currently, SAP trades at a PE of 34x. This figure is higher than both the Software industry average of 27.1x and its peer group average of 30.6x, indicating a premium valuation compared to the broader market.
For additional context, Simply Wall St’s “Fair Ratio” for SAP is calculated at 39.7x. This proprietary metric improves upon broad industry averages or peer comparisons by considering SAP’s unique combination of earnings growth, risk profile, profit margins, and market capitalization. This offers investors a clearer perspective on what SAP’s multiple might be when accounting for its fundamental strengths, rather than relying on a general comparison.
Because SAP’s actual PE of 34x is below its Fair Ratio of 39.7x, the stock currently appears undervalued on this metric. This suggests potential for further upside if the company meets its growth and profitability expectations.
Result: UNDERVALUED
XTRA:SAP PE Ratio as at Nov 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 companies where insiders are betting big on explosive growth.
Earlier, we mentioned there is an even better way to understand valuation; let’s introduce you to Narratives. A Narrative is a simple, accessible way to describe your unique perspective on a company, giving a story behind the numbers, from what you think is a fair value through to your forecasts for revenue, earnings, and profit margins.
Narratives connect the dots between a company’s story, a financial forecast, and a fair value estimate, allowing you to see not just what a company is worth, but why investors believe that. This interactive investment tool is available inside Simply Wall St’s Community page, making it easy for anyone to create or browse different viewpoints from millions of investors.
With Narratives, you can instantly compare Fair Value to today’s Price to help decide when it may be the right time to buy or sell, with each Narrative adjusting automatically as new news or earnings updates arrive. For example, some investors project SAP’s fair value as high as €345, seeing strong cloud growth and margin expansion, while others are more cautious, suggesting a value as low as €192 if competitive pressures and regulatory costs outweigh the upside.
Do you think there’s more to the story for SAP? Head over to our Community to see what others are saying!
XTRA:SAP Community Fair Values as at Nov 2025
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.
Companies discussed in this article include SAP.DE.
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