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SGS SA (CH:SGSN)
:SGSN
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SGS SA
(SGSN)
Rating:72Outperform
Price Target:
CHF94.00
â–²(17.03%Upside)
SGS SA (SGSN) vs. iShares MSCI Switzerland ETF (EWL)
Market Cap
CHF15.60B
Dividend Yield3.88%
Average Volume (3M)368.91K
Price to Earnings (P/E)26.0
Beta (1Y)0.83
Revenue Growth2.60%
EPS Growth3.16%
CountryCH
Employees95,244
SectorIndustrials
Sector Strength84
IndustryConsulting Services
Share Statistics
EPS (TTM)1.87
Shares Outstanding194,777,280
10 Day Avg. Volume418,942
30 Day Avg. Volume368,913
Financial Highlights & Ratios
PEG Ratio-8.10
Price to Book (P/B)23.49
Price to Sales (P/S)0.00
P/FCF Ratio24.54
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
CHF93.88Price Target Upside16.88% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
SGS SA Business Overview & Revenue Model
Company DescriptionSGS SA provides inspection, verification, testing, certification, and quality assurance services in Europe, Africa, the Middle East, the Americas, and the Asia Pacific. It operates in five segments: Connectivity & Products, Health & Nutrition, Industries & Environment, Natural Resources and Knowledge. The company provides laboratory testing, product inspection and consulting, process assessment, technical and transactional assistance; digital solutions, which include cybersecurity, the internet of things, digital platform, and mobile application services. In addition, it offers a range of testing, inspection and certification solutions for the crop science, food, health science, and cosmetics and hygiene industries; field services, technical assessment and advisory services; and services related to industrial, public health and safety, environmental testing, and public mandates. Further, it provides certification, training, supply chain assurance, technical consulting, and ESG assurance services; and laboratory outsourcing, commodities logistics, geochemistry, metallurgy, sustainability, and market intelligence solutions. The company serves the agriculture and food, chemical, construction, consumer and retail, energy, industrial manufacturing, life sciences, mining, oil and gas, public, and transportation sectors. SGS SA was founded in 1878 and is headquartered in Geneva, Switzerland.
How the Company Makes MoneySGS SA generates revenue primarily through its diverse portfolio of services that cater to numerous industries. The company's key revenue streams include testing services, where it analyzes the quality and safety of products; inspection services, which involve the verification of products, services, and processes to ensure compliance with regulatory and client-specific standards; and certification services, which offer independent third-party validation that a product, process, system, or service meets specific requirements. SGS also benefits from strategic partnerships and collaborations with industry leaders and governments, enhancing its service offerings and market reach. Additionally, the company's global presence and reputation contribute significantly to its ability to secure contracts and maintain a steady flow of income across various economic environments.
SGS SA Earnings Call Summary
Earnings Call Date:Feb 11, 2025
(Q4-2024)
| % Change Since: -8.62%|
Next Earnings Date:Jul 25, 2025
Earnings Call Sentiment Positive
SGS delivered strong financial performance in 2024 with record cash generation, significant organic growth, and successful execution of its M&A strategy. Despite facing challenges from ForEx impacts and some pressures in the Business Assurance division, the overall results were positive, supported by improvements in margins and leverage.Q4-2024 Updates
Positive Updates
Record Cash Generation
SGS achieved a record high cash generation of CHF748 million in 2024, marking a 24% increase compared to 2023.
Strong Organic Growth
SGS reported a strong organic growth of 7.5%, contributing to a record net sales of CHF6.8 billion.
Significant Margin Improvement
The company reported a 15.3% margin on sales, a 60 basis points increase over 2023.
Successful M&A Strategy
SGS completed 14 bolt-on acquisitions in 2024, enhancing its portfolio and reinforcing its presence, particularly in North America.
Double-Digit Growth in Sustainability
Incremental sales of CHF100 million were recorded in sustainability, with strong double-digit growth in climate-related services.
Improved Leverage
The company's leverage improved from 2 times in 2023 to 1.8 times in 2024, demonstrating financial stability.
Strong Performance in Natural Resources
The Natural Resources segment saw a strong organic sales growth of 7.6%, with significant contributions from minerals and oil, gas, and chemicals.
Negative Updates
ForEx Impact on Sales and Income
The Swiss franc's appreciation resulted in a negative ForEx translation impact of 4.8% on sales and 7.1% on adjusted operating income.
Challenges in Business Assurance
The Business Assurance division's growth was partially offset by a slowdown in consulting and an unfavorable comparable in consulting with Maine Pointe.
Volume vs. Price Pressure
Approximately 50% of the 7.5% organic growth was driven by price increases, indicating potential pressures on volume growth.
Company Guidance
In the 2024 fiscal year, SGS achieved remarkable financial performance, reaching a record CHF6.8 billion in net sales, driven by a strong organic growth of 7.5%. The adjusted operating income rose to CHF1,040 million, marking a 15.3% margin on sales, which is a 60 basis points improvement over 2023. Notably, the company generated an outstanding free cash flow of CHF748 million, a 24% increase from the previous year, and reported earnings per share of CHF3.10, up by 3.3%. Key strategic initiatives included executing a CHF100 million efficiency plan and acquiring 14 bolt-on companies, which contributed to the financial and operational success. Looking ahead to 2025, SGS anticipates continued strong organic growth, with sales expected to increase by 5% to 7%, and further margin improvements despite potential forex impacts.SGS SA Financial Statement Overview
Summary
SGS SA demonstrates strong profitability and cash flow generation, with solid revenue growth and high returns on equity. However, significant leverage poses potential financial risks, and there is pressure on operational efficiency.Income Statement
SGS SA demonstrates strong profitability with a consistent gross profit margin of over 85% and a solid net profit margin of approximately 8.6% for 2024. Revenue growth has been stable, with a 2.6% increase from 2023 to 2024, indicating steady expansion. However, EBIT and EBITDA margins slightly declined over the years, suggesting some pressure on operational efficiency.80
Positive
Balance Sheet
The company's balance sheet reveals a high debt-to-equity ratio of 4.87 in 2024, which indicates significant leverage, posing potential risks. However, the equity ratio has improved to 11.8%, reflecting better capital structure management. Return on equity is robust at 72.9%, highlighting effective use of equity despite higher leverage.68
Positive
Cash Flow
SGS SA's cash flow is strong with a free cash flow growth rate of 17.94% from 2023 to 2024, indicating efficient cash management. The operating cash flow to net income ratio is favorable at 2.11, supporting financial stability. However, the free cash flow to net income ratio of 1.68 suggests limited excess cash generation after capital expenditures.75
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 6.79B | 6.62B | 6.64B | 6.41B | 5.60B |
| Gross Profit | 5.83B | 2.36B | 2.41B | 2.34B | 2.01B |
| EBITDA | 1.40B | 1.36B | 1.40B | 1.48B | 1.25B |
| Net Income | 581.00M | 553.00M | 588.00M | 613.00M | 480.00M |
Balance Sheet | |||||
| Total Assets | 6.75B | 6.76B | 7.12B | 7.01B | 6.91B |
| Cash, Cash Equivalents and Short-Term Investments | 1.21B | 1.57B | 1.62B | 1.48B | 1.77B |
| Total Debt | 3.88B | 4.41B | 4.45B | 3.81B | 3.87B |
| Total Liabilities | 5.87B | 6.23B | 6.36B | 5.80B | 5.77B |
| Stockholders Equity | 797.00M | 459.00M | 682.00M | 1.12B | 1.06B |
Cash Flow | |||||
| Free Cash Flow | 973.00M | 825.00M | 653.00M | 782.00M | 875.00M |
| Operating Cash Flow | 1.22B | 1.12B | 985.00M | 1.12B | 1.14B |
| Investing Cash Flow | -393.00M | -300.00M | -397.00M | -549.00M | -671.00M |
| Financing Cash Flow | -1.19B | -839.00M | -375.00M | -826.00M | -117.00M |
SGS SA Technical Analysis
Negative
80.32
Price Trends
82.78
Negative
84.77
Negative
86.38
Negative
Market Momentum
-0.69
Positive
33.42
Neutral
25.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:SGSN, the sentiment is Negative. The current price of 80.32 is below the 20-day moving average (MA) of 84.28, below the 50-day MA of 82.78, and below the 200-day MA of 86.38, indicating a bearish trend. The MACD of -0.69 indicates Positive momentum. The RSI at 33.42 is Neutral, neither overbought nor oversold. The STOCH value of 25.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CH:SGSN.
SGS SA Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | CHF20.56B | 17.11 | 3.89% | 13.34% | -4.15% | ||
73 Outperform | CHF6.87B | 21.03 | 11.24% | 2.55% | 7.28% | 7.39% | |
72 Outperform | CHF15.60B | 25.99 | 3.88% | 2.60% | 3.16% | ||
71 Outperform | CHF3.97B | 18.48 | 3.11% | 0.25% | 18.00% | ||
68 Neutral | CHF3.79B | 13.79 | 3.53% | -4.20% | -6.26% | ||
66 Neutral | $4.76B | 18.23 | 22.45% | 2.47% | 7.58% | 14.41% | |
58 Neutral | $1.34B | 4.08 | -2.93% | 10.79% | 3.41% | -51.76% |
* Industrials Sector Average
Performance Comparison
CH:SGSN
SGS SA
80.32
3.09
4.00%
CH:KNIN
Kuehne + Nagel International AG
174.60
-75.16
-30.09%
CH:ADEN
Adecco Group AG
22.64
-6.12
-21.28%
CH:DKSH
DKSH Holding AG
61.10
1.90
3.21%
CH:SUN
Sulzer AG
139.00
17.26
14.18%
CH:FHZN
Flughafen Zurich AG
225.00
34.29
17.98%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.