CrowdStrike Holdings, Inc. CRWD commands a lofty valuation, trading at a forward 12-month price-to-earnings (P/E) multiple of 81.68X — well above the Zacks Internet – Software industry average of 35.37X. Its forward 12-month price-to-sales (P/S) ratio of 18.29 also far exceeds the industry average of 3.01.

Forward 12-Month P/S Valuation

Image Source: Zacks Investment Research

Even more surprising is that CrowdStrike trades at such a lofty valuation multiple despite a 7.6% decline in its share price over the past six months. The stock has underperformed the industry’s return of 14.6% over the same time frame, as well as major cybersecurity players, including Fortinet Inc. FTNT and CyberArk Software Ltd. CYBR, which have rallied 57.8% and 24.8%, respectively.

6-Month Price Return Performance

Image Source: Zacks Investment Research

Despite this underperformance, the stock’s premium valuation underscores investor confidence in its long-term potential, even as it faces near-term headwinds.

Addressing CrowdStrike’s Recent Setbacks

CrowdStrike’s reputation took a hit following a global IT outage in July 2024, which was traced to its Falcon platform. This incident not only disrupted millions of Microsoft Corporation’s MSFT Windows devices but also lengthened sales cycles and deferred deals, creating short-term pressures on the company’s annual recurring revenue (ARR) growth.

CrowdStrike’s revenue growth has slowed, with projections in the 20% range for fiscal 2025 and 2026, compared to its pre-2023 fiscal highs of more than 50%.

Image Source: Zacks Investment Research

While the Zacks Consensus Estimate for fiscal 2025 EPS has been revised upward by a penny to $3.74 over the past seven days, the consensus mark for fiscal 2026 EPS has been revised downward by 6 cents to $4.30.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Despite these challenges, the company has taken proactive steps to rebuild trust and improve its platform. Enhancements to Falcon’s automated recovery and security features highlight its commitment to customer confidence and innovation.

CrowdStrike’s Long-Term Strengths Remain Intact

CrowdStrike’s leadership in cybersecurity remains undisputed. The company secured several eight-figure contracts in the third quarter of fiscal 2025, demonstrating the resilience of its sales pipeline. Its Falcon platform, featuring more than 28 modules spanning endpoint protection, identity security and next-gen SIEM, is a cornerstone of its diversified offerings.

The “Falcon Flex” subscription model is particularly noteworthy. By enabling modular adoption of security features, it simplifies procurement and fosters customer retention, ensuring a steady revenue stream. These strategies, combined with a commitment to innovation, position CrowdStrike as a dependable partner in an increasingly complex cybersecurity landscape.

Conclusion: Hold CrowdStrike Stock for Now

While CrowdStrike faces near-term hurdles, such as elevated valuation metrics and slower growth, its long-term prospects remain compelling. The company’s focus on innovation, strategic customer relationships and diversified product portfolio provide a strong foundation for future growth.

For investors, holding on to CrowdStrike stock appears prudent as the company navigates its challenges while remaining a dominant force in the cybersecurity sector. CrowdStrike carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

Fortinet, Inc. (FTNT) : Free Stock Analysis Report

CyberArk Software Ltd. (CYBR) : Free Stock Analysis Report

CrowdStrike (CRWD) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research