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SAP SE ADR SAP

Morningstar Rating
$186.91 +0.17 (0.09%)
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Company Report

SAP Earnings: Fourth-Quarter Results Buoyed by Continued Cloud Demand

We are raising our fair value estimate for SAP to EUR 132 from EUR 119 after the firm reported a strong fourth quarter, beating our EPS expectations. Longer term, we continue to believe SAP’s otherwise strong switching costs will be restored once the bulk of enterprise workloads have moved to the cloud. However, we think the firm will experience an uptick in churn over the next 10 years as cloud migrations give way to rethinking IT strategies and software vendors. Management provided solid 2024 guidance as well as reiterating its 2025 targets, which we expect to be supported through its transformation roadmap involving greater strategic investment toward cloud and Business AI. While shares were up around 7% after these results, we still view the shares as overvalued.

Price vs Fair Value

SAP is trading at a 30% premium.
Price
$186.67
Fair Value
$643.00
Uncertainty
Medium
1-Star Price
$881.80
5-Star Price
$452.50
Economic Moat
Rwzyrr
Capital Allocation
Hml

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
$186.74
Day Range
$186.91188.17
52-Week Range
$113.05189.79
Bid/Ask
$187.00 / $187.13
Market Cap
$219.04 Bil
Volume/Avg
160,870 / 702,336

Key Statistics

Price/Earnings (Normalized)
38.78
Price/Sales
6.52
Dividend Yield (Trailing)
1.20%
Dividend Yield (Forward)
1.20%
Total Yield
1.67%

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)
38.7856.1119.28
Price/Book Value
4.589.607.52
Price/Sales
6.5210.792.76
Price/Cash Flow
33.1235.8714.55
Price/Earnings
SAP
WDAY
IBM

Financial Strength

Metric
SAP
WDAY
IBM
Quick Ratio
1.382.010.80
Current Ratio
1.552.130.96
Interest Coverage
2.25−0.065.99
Quick Ratio
SAP
WDAY
IBM

Profitability

Metric
SAP
WDAY
IBM
Return on Assets (Normalized)
7.42%10.36%6.74%
Return on Equity (Normalized)
12.88%23.20%39.82%
Return on Invested Capital (Normalized)
11.28%13.74%11.92%
Return on Assets
SAP
WDAY
IBM
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SNOW
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