SAP (XTRA:SAP): Exploring Valuation After Recent Share Price Pullback

SAP (XTRA:SAP) shares have edged lower over the past month, with the stock down about 2%. Investors are watching closely as profits and revenue continue to grow at a steady annual pace, a sign of the company’s ongoing transformation.

See our latest analysis for SAP.

After notching up a modest 4.5% total shareholder return over the past year, SAP has lately lost some momentum, with the share price pulling back roughly 8% in the last three months. That said, the company’s steady growth in revenue and profits continues to support its long-term performance story.

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The question now is whether SAP’s recent pullback offers a compelling entry point for long-term investors, or if its consistent growth has already been fully factored into the current share price.

Most Popular Narrative: 9.7% Undervalued

According to Tokyo's narrative, SAP’s fair value is estimated at €248.62, which is about 9.7% above the last close at €224.45. The narrative highlights bold projections and strategic shifts that may surprise long-time followers of the company.

Profit Margin: 18% (currently at 12.3%). The transition to cloud was very cost intensive, which kept margins during the last 3 years below 10%. Before that, SAP's profit margins ranged between 15% and 20%. Even 20% could be reached in the long run.

Read the complete narrative.

Want to know the growth blueprint behind this high valuation? The key element of this narrative is record-breaking earnings and a future profit multiple usually associated with tech leaders. Interested in which bold financial projections support that price target? Dive deeper to see the surprising numbers that drive this fair value calculation.

Result: Fair Value of €248.62 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rapid technological disruption or slower than expected AI adoption could challenge this growth narrative and put pressure on SAP’s ambitious long-term targets.

Find out about the key risks to this SAP narrative.

Another View: What Do Market Ratios Say?

Looking at SAP's price-to-earnings ratio reveals a different angle. The company trades at 36.9 times earnings, making it pricier than the European software industry average of 27.7 and slightly above its peer average of 36. In contrast, the estimated fair ratio sits at 40, suggesting there may still be room for the market to move higher, but not without some risk if industry multiples pull back. Do these stretched ratios signal opportunity or caution for investors?

Story Continues

See what the numbers say about this price — find out in our valuation breakdown.XTRA:SAP PE Ratio as at Nov 2025

Build Your Own SAP Narrative

If you’re keen to dig into the numbers yourself or want to chart a different course, you can build your own view of SAP in just a few minutes with our tools. Shape the narrative your way with Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding SAP.

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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.

Companies discussed in this article include SAP.DE.

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