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SAP SE SAP

Morningstar Rating
€168.76 −1.62 (0.95%)
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Company Report

SAP’s Narrow Moat Is Exposed Amid Cloud Migrations

SAP is a best-in-breed enterprise resource planning provider and holds dominant market share in global ERP software. However, SAP is phasing out its support of its on-premises ERP software such that by 2040 all of its ERP customers will need to shift to a cloud solution. We think that this vulnerability is a significant threat to SAP’s switching costs, as competitors like Workday offer compelling cloud ERP solutions, while forced migration opens up opportunity to question a company’s best fit for ERP needs. In turn, we believe SAP’s narrow moat, derived from its switching costs, is trending negative. However, it is still early in SAP's transition of on-premises users to the cloud, which leads us to believe its negative trend could be prolonged.

Price vs Fair Value

SAP is trading at a 29% premium.
Price
€170.38
Fair Value
€951.00
Uncertainty
Medium
1-Star Price
€312.30
5-Star Price
€33.50
Economic Moat
Swnlztc
Capital Allocation
Sghy

Bulls Say, Bears Say

Bulls

SAP should be able to migrate the majority of its on-premises ERP customers to S/4HANA while continuing to add hefty net new customers to the platform.

Bears

SAP’s S/4HANA mandated transition could cause even greater customer churn as customers are forced to reassess their ERP and database providers.

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News

Trading Information

Previous Close Price
€170.38
Day Range
€168.76171.12
52-Week Range
€113.10184.48
Bid/Ask
€0.00 / €0.00
Market Cap
€196.98 Bil
Volume/Avg
1.5 Mil / 1.6 Mil

Key Statistics

Price/Earnings (Normalized)
34.45
Price/Sales
6.52
Dividend Yield (Trailing)
1.19%
Dividend Yield (Forward)
1.28%
Total Yield
1.66%

Company Profile

Founded in 1972 by former IBM employees, SAP provides database technology and enterprise resource planning software to enterprises around the world. Across more than 180 countries, the company serves 440,000 customers, approximately 80% of which are small- to medium-size enterprises.
Sector
Technology
Industry
Software - Application
Stock Style Box
Large Growth
Total Number of Employees
107,602

Competitors

Valuation

Metric
SAP
WDAY
IBM
Price/Earnings (Normalized)
34.4544.1019.12
Price/Book Value
4.668.417.46
Price/Sales
6.529.412.74
Price/Cash Flow
32.6231.3014.42
Price/Earnings
SAP
WDAY
IBM

Financial Strength

Metric
SAP
WDAY
IBM
Quick Ratio
1.261.870.80
Current Ratio
1.401.970.96
Interest Coverage
7.171.485.99
Quick Ratio
SAP
WDAY
IBM

Profitability

Metric
SAP
WDAY
IBM
Return on Assets (Normalized)
8.36%10.93%6.74%
Return on Equity (Normalized)
14.10%23.82%39.82%
Return on Invested Capital (Normalized)
11.17%14.34%11.92%
Return on Assets
SAP
WDAY
IBM
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Software - Application Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
CRM
Salesforce IncXpzgmvfNvfzq$268.0 Bil
SAP
SAP SE ADRCszwSkltph$213.3 Bil
INTU
Intuit IncKscchgrqgrYtmh$171.2 Bil
UBER
Uber Technologies IncWlqxncksQygzd$154.3 Bil
NOW
ServiceNow IncPwjrthnlgNdy$153.0 Bil
SHOP
Shopify Inc Registered Shs -A- Subord VtgDrgkwtwNdmkkg$89.3 Bil
CDNS
Cadence Design Systems IncJxnlhmqtdsGhzgnr$80.0 Bil
WDAY
Workday Inc Class AMvtygfhdXfcf$67.9 Bil
ROP
Roper Technologies IncZxbthlnycPzsm$56.3 Bil
DASTY
Dassault Systemes SE ADRMtjgtgptMvwnc$54.5 Bil

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