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Wondering if CrowdStrike Holdings is still worth your attention at current prices, or if the risk to reward trade off is starting to look stretched.
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The stock last closed at US$369.58, with a 9.6% decline over the past 7 days, a 1.7% gain over 30 days, an 18.5% decline year to date, a 3.5% return over the last year, and very large gains over 3 and 5 years.
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Recent headlines have focused on CrowdStrike’s role in cybersecurity and its position in broader discussions about digital risk. This helps frame how investors think about its long term potential and often feeds directly into how much growth and stability investors are willing to price into the stock at any given time.
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Right now, CrowdStrike scores just 1 out of 6 on Simply Wall St’s valuation checks. It is therefore worth looking closely at how different valuation methods compare, and then considering an alternative way to think about value that will be covered at the end of this article.
CrowdStrike Holdings scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and discounting them back to today’s value. It is essentially asking what those future dollars are worth in today’s terms.
For CrowdStrike Holdings, the latest twelve month Free Cash Flow is about $1.24b. Using a 2 Stage Free Cash Flow to Equity model, analysts and Simply Wall St project Free Cash Flow out over the next decade, with analyst inputs for the earlier years and extrapolated estimates thereafter. By 2031, projected Free Cash Flow is $4.64b, with additional extrapolated figures extending to 2035.
When all those projected cash flows are discounted back to today, the model produces an estimated intrinsic value of about $353.04 per share. Against the recent share price of $369.58, this points to the stock trading at roughly a 4.7% premium to the model’s estimate, which is a relatively small gap for such a long range cash flow forecast.
Result: ABOUT RIGHT
CrowdStrike Holdings is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
For companies that are still building up profitability or reinvesting heavily, P/S is often more useful than P/E because it compares the share price to current revenue rather than earnings that may be small or volatile.
What investors are willing to pay for each dollar of sales usually reflects two things: how quickly they expect those sales to grow and how much risk they see around that growth. Higher expected growth and lower perceived risk tend to support a higher “normal” or “fair” P/S multiple, while slower growth or higher risk usually point to a lower one.
CrowdStrike currently trades at a P/S of 19.48x. This sits well above the Software industry average of 3.34x and also above a peer average of 8.88x. Simply Wall St’s Fair Ratio for CrowdStrike is 12.22x, which is a proprietary estimate of what the P/S might be given factors such as the company’s growth profile, industry, profit margins, market cap and key risks.
Compared with simple peer or industry comparisons, the Fair Ratio aims to be more tailored because it considers those company specific drivers rather than relying on broad group averages.
Set against the current 19.48x P/S, the 12.22x Fair Ratio suggests the shares are pricing in richer expectations than this framework implies.
Result: OVERVALUED
P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Earlier a better way to understand valuation was mentioned. This is where Narratives come in, giving you a simple way to attach your story about CrowdStrike Holdings to the numbers by linking your view of its business to a specific forecast for revenue, earnings, margins and a fair value. You can then compare that fair value with the current price to decide whether the stock looks attractive, using an easy tool on Simply Wall St’s Community page that updates as new news and earnings arrive and shows how different investors can land in very different places. For example, one Narrative currently values CrowdStrike at about US$113.04 per share while another sits near US$692.37.
For CrowdStrike Holdings, here are previews of two leading CrowdStrike Holdings Narratives to make comparison easier:
🐂 CrowdStrike Holdings Bull Case
Fair value in this narrative: US$431.24 per share
Implied discount to this fair value: about 14.3% below the narrative estimate at the recent US$369.58 share price
Revenue growth assumption: 18%
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The author views Falcon as a flexible, cloud native, modular platform that can keep expanding through new modules and acquisitions while avoiding product silos for customers.
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The narrative highlights subscription style ARR as the key metric, with a long term target of US$10b ARR supported by an asset light balance sheet and a focus on returns on equity.
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Even after the July 19 update incident that caused system issues, this view assumes customer demand and cash flow potential remain intact and supports a fair value above the current share price.
🐻 CrowdStrike Holdings Bear Case
Fair value in this narrative: US$324.30 per share
Implied premium to this fair value: about 14.0% above the narrative estimate at the recent US$369.58 share price
Revenue growth assumption: 25.01%
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This narrative focuses on strong product adoption and subscription revenue but pairs that with a view that the current valuation already reflects very high expectations.
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The author flags competition, regulatory and execution risks, along with very high P/E multiples, as reasons to be cautious about paying too far above an internally estimated fair value.
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It assumes solid revenue growth and healthy margins but still arrives at a fair value below the current share price, which leads to a more conservative stance on the stock.
Together, these two narratives show how different assumptions about fair value, growth and risk can lead to very different views on the same numbers. They provide a useful starting point before you form your own judgment.
Do you think there’s more to the story for CrowdStrike Holdings? Head over to our Community to see what others are saying!
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 CRWD.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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