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If you are wondering whether SAP’s current share price still offers value, the recent moves in the stock make it a good moment to take a closer look at what you are actually paying for.
The stock closed at €156.72, with a 10.1% gain over the last 7 days, a 0.3% return over the past month, and declines of 22.4% year to date and 39.9% over the last year, which contrast with gains of 33.7% over 3 years and 47.9% over 5 years.
Recent news around SAP has focused on the company’s position as a major software provider and how investors are reassessing established technology stocks in light of changing expectations and sector sentiment. This backdrop helps explain why the stock has seen short term strength but still sits well below its levels from a year ago.
Simply Wall St currently assigns SAP a valuation score of 3 out of 6. The rest of this article will unpack what that means across different valuation methods, and then finish with a practical way to bring all of these signals together.
Approach 1: SAP Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model estimates what a stock could be worth by projecting the company’s future cash flows and then discounting them back to today’s value. It is essentially asking what those future euros are worth in today’s money.
For SAP, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow stands at about €8.1b. Analyst inputs and subsequent projections point to free cash flow of €9.97b in 2026 and €12.71b in 2028. Beyond the analyst horizon, Simply Wall St extrapolates cash flows out to 2035 using gradually moderating growth assumptions to complete the 10 year path.
When all those projected cash flows are discounted back, the DCF model arrives at an estimated intrinsic value of €248.53 per share. Compared with the recent share price of €156.72, this implies a discount of about 36.9%, which indicates that the stock is trading below this model’s estimate of fair value.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests SAP is undervalued by 36.9%. Track this in your watchlist or portfolio, or discover 229 more high quality undervalued stocks.
SAP Discounted Cash Flow as at May 2026
Approach 2: SAP Price vs Earnings (P/E)
For a profitable company like SAP, the P/E ratio is a useful way to gauge how much you are paying for each euro of earnings. A higher P/E often reflects stronger growth expectations or lower perceived risk. In contrast, a lower P/E can point to more modest growth expectations or higher perceived risk.
Story Continues
SAP currently trades on a P/E of 25x. That sits above both the peer average of 21.16x and the broader Software industry average of about 23.11x. On these simple comparisons, the stock carries a higher earnings multiple than many of its listed peers.
Simply Wall St takes this a step further with its Fair Ratio. This metric estimates what a more tailored P/E might look like once factors such as SAP’s earnings growth profile, industry, profit margins, market cap and risk characteristics are considered together. This Fair Ratio for SAP is 34.47x, which is higher than the current 25x P/E. Compared with this Fair Ratio, SAP’s P/E suggests the stock is trading below what this model would indicate as a more company specific level.
Result: UNDERVALUED
XTRA:SAP P/E Ratio as at May 2026
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Upgrade Your Decision Making: Choose your SAP Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so this is where Narratives come in, a simple way for you to attach a clear story about SAP to the numbers you are seeing by linking your view of its future revenue, earnings and margins to a financial forecast and then to a fair value.
On Simply Wall St’s Community page, Narratives are short, accessible valuation set ups used by millions of investors, where you outline your assumptions and the platform converts them into forward estimates and a fair value that updates automatically when new information such as news or earnings is added.
That fair value can then be compared with SAP’s current share price to help you decide whether the stock looks expensive or inexpensive relative to your own story, rather than relying only on a single P/E or DCF outcome.
For SAP, one investor might build a more cautious Narrative that leans closer to the bearish analyst cohort, with revenue growth of about 9.5%, profit margins near 19.7%, a P/E of 26.5x and a fair value around €178.44. Another might use more optimistic assumptions, like 13.8% revenue growth, 22.6% margins, a 31.5x P/E and a fair value near €280.93. Seeing those different Narratives side by side helps you decide which set of assumptions feels more realistic for your own decision making.
Do you think there’s more to the story for SAP? Head over to our Community to see what others are saying!
XTRA:SAP 1-Year Stock Price Chart
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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