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SAP SE (SAP) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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SAP SE (SAP)

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Intrinsic Value (DCF)

Current$238.88
→
Intrinsic$80.67
-66%
$53.86$80.67$134.02
Current price reflects execution expectations above 11% growth — not unreasonable for quality businesses.
Range: Bear $54 → Bull $134. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $134).
Discount ↓Growth →7%9%11%13%
8%$99$108$118$129
10%$68$74$81$88
12%$52$56$61$66
14%$41$45$49$53

Bull Case

  • Bull case ($134) with 13% growth, 8% discount rate
  • Conservative 11% growth assumption is achievable based on track record

Bear Case

  • Bear case ($54) implies 77% downside at 8% growth, 12% discount
  • Trading 66% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($134) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$4.89B
Year 2$5.40B
Year 3$5.97B
Year 4$6.60B
Year 5$7.30B
Terminal$115.67B

📐 Model Inputs

Growth Rate10.5%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$4.42BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is SAP stock undervalued or overvalued?
🔴 OVERVALUED

SAP trades at $238.88 vs. our DCF-derived intrinsic value of $80.67, implying -66% downside. Using a 9.5% WACC and 10.5% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($115.74) suggests limited upside.

What is SAP's intrinsic value?

Using a 5-year DCF model: Base FCF of $4.42B, projected at 10.5% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.04B net debt and dividing by 1.18B shares: Bear $55.87 | Base $80.67 | Bull $115.74. Current price $238.88 implies -66% to base case.

How is SAP's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 10.5% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($96.23B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 21.8x.