Does CrowdStrike Stock Offer Growth Potential After Recent Price Dip?

• Wondering if CrowdStrike Holdings is living up to the buzz or if now is the right time to get in? Let’s break down what is really happening with the stock and where it could be headed.
• Despite a dip of 3.7% in the past week and 5.3% over the last month, CrowdStrike has delivered a 44.4% gain year-to-date and reports a 326.3% return over three years.
• Interest in cybersecurity stocks remains high after recent headlines about global cyberattacks and new government cybersecurity initiatives. Both have put CrowdStrike’s solutions in the spotlight. With investors weighing both new opportunities and rising competition, the stock’s momentum has seen some interesting twists lately.
• Before diving into our take, note that CrowdStrike currently scores a 0 out of 6 on traditional undervaluation checks, which has raised some eyebrows about how it is priced. Classic valuation methods often miss the big picture, so stick around for a look at alternative approaches and a smarter way to think about the company’s worth.

CrowdStrike Holdings scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: CrowdStrike Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates the value of a company by projecting its future cash flows and discounting them back to today's value. This approach provides insight into what CrowdStrike Holdings could be worth based on its ability to generate cash over time.

According to the most recent data, CrowdStrike reported Free Cash Flow of $1.04 Billion for the last twelve months. Analyst projections expect this figure to grow rapidly, with estimates reaching $4.76 Billion by 2030. These future projections combine actual analyst estimates for the next five years and then rely on long-term trend assumptions for later years.

Based on the DCF analysis, the calculated fair value for CrowdStrike stock is $453.44 per share. This value is compared against the current market price and indicates that the stock is trading at a 10.6% premium. In other words, based on cash flow forecasts and their present value, shares are slightly overvalued at this time.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests CrowdStrike Holdings may be overvalued by 10.6%. Discover 926 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for CrowdStrike Holdings.

Approach 2: CrowdStrike Holdings Price vs Sales

For a high-growth technology company like CrowdStrike Holdings, the Price-to-Sales (PS) ratio is often a more meaningful valuation metric, especially when profitability is still ramping up. The PS ratio focuses on company revenue, making it well suited for businesses reinvesting heavily in growth even if net income is limited.

The "right" PS ratio depends on multiple factors, including expectations for future growth and the risks facing the company. Generally, companies with higher growth rates and lower perceived risks warrant higher ratios, while slower-growing or riskier businesses trade at lower multiples.

CrowdStrike is currently trading at a PS ratio of 29x. This is well ahead of the software industry average of 4.7x, and also higher than its peer average of about 12.5x. At first glance, this kind of premium might seem hard to justify, but it reflects investor expectations for continued rapid growth and leadership in cybersecurity.

Simply Wall St's proprietary "Fair Ratio" weighs factors like CrowdStrike’s sales growth, industry, margins, market cap, and specific risks. For CrowdStrike, the Fair Ratio comes in at 18x. This is a more nuanced benchmark than industry or peer averages, as it is tailored to CrowdStrike’s characteristics and outlook.

Comparing the actual PS ratio of 29x to the Fair Ratio of 18x suggests that the stock is trading at a significant premium to even its growth-adjusted fair value.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your CrowdStrike Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a clear, structured way to capture your perspective on a company. It is the story behind the numbers, connecting your assumptions about future revenue, earnings, and margins to an estimated fair value. Narratives help you see beyond traditional ratios by linking what the company does, its growth potential, and key developments, directly to a financial outlook that you can compare to the current share price.

On Simply Wall St's platform, Narratives are easy to use and available within the Community page. This makes it accessible for millions of investors to build and revisit their investment cases as facts change. These tools help you make smarter investment decisions by updating your fair value automatically in response to news, earnings, or changing business conditions. For example, one investor thinks CrowdStrike is undervalued at $431 per share due to strong recurring revenue growth and a modular product strategy, while another values it at $519 per share, expecting accelerating adoption of AI-powered solutions and expanding cloud partnerships. Narratives let you capture your unique view and dynamically adjust your strategy as new information arrives.

For CrowdStrike Holdings, we’ll make it straightforward for you with previews of two leading CrowdStrike Holdings Narratives:

• 🐂 CrowdStrike Holdings Bull Case

  Fair Value Estimate: $518.96

  Currently trading at about 3.36% above fair value

  Forecast Revenue Growth Rate: 21.93%

  • Analysts highlight strategic innovations in AI tools and modular subscription models, which may drive revenue growth and improved profitability.
  • Strong cloud partnerships, expanding security offerings, and large enterprise deals signal potential for significant market expansion.
  • Risks include execution on emerging products and maintaining rapid growth to justify premium valuations.
• 🐻 CrowdStrike Holdings Bear Case

  Fair Value Estimate: $431.24

  Currently trading at about 16.32% above fair value

  Forecast Revenue Growth Rate: 18.0%

  • The modular, cloud-based Falcon platform and recurring revenue are seen as long-term strengths, but growth targets are ambitious.
  • Recent operational incidents (such as system shutdowns) have not dented customer loyalty, though the stock price already reflects aggressive expectations.
  • Valuation risk remains high, and achieving continued outperformance will depend on consistent execution amid competition.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com