SAP SE (SAP.DE) at 168.68, down 13% today on an earnings release that apparently was not well received...

Progress from the kickoff post at end Jan: Price around 151-152 today, still hitting fresh 52 weeks lows.
culter adhuc cadit*

But what should a person pay?

Trailing P/E ratio is not the best way to value this firm, but FWIW it's still high by conventional standards at 25, but in the last 10 years was lower only for a few months in early 2022. If you like good omens, the price was up by a factor of 2.5 in the subsequent couple of years that time...so it's a "buy" on the simplistic "history will repeat" theory of investing.

More seriously, the general idea is that such a reliable stream of future earnings is worth a premium, so it's mainly a matter of discerning how MUCH of a premium applies.

A simplistic analysis: I'm cheap, so my starting rule of thumb for *anything* is I don't like it above 21 times on-trend earnings (what the current period would be if it were neither unusually good nor unusually bad). Consequently, offhand I'd say it was a good deal at 125 today (not far from 21 times trailing headline earnings), but my impression is that it's already into a range that should give entirely satisfactory returns in the next few years (not far from 21 times estimated current year earnings).

A more sophisticated but conservative rule that I use that works for most any kind of firm from dead end cash cow to currently-profitless speculative growth rocket: if you pay no more than 12 times the "pretty darned sure" average real EPS in the stretch 5-10 years in the future, you'll do OK. If you pay less than 10 times that figure, you'll do very well. That rule implicitly assumes fairly modest terminal multiples. Flipped around, starting from a trailing EPS figure around 6.10, EPS growth would have to be 10%/year for today's price of 152 to get you the "under 12" threshold, or 12.6%/year to get you the "under 10" threshold. Those are similar to some analyst forecasts, lower than others. But they aren't low figures, so the "pretty darned sure" test probably isn't met. Yet.

Jim

* as the saying goes, a gentleman need not know Latin, but should at least have forgotten it