SGS SA (SGSN) AI Stock Analysis

• Market Cap: CHF16.22B
• Dividend Yield: 3.83%
• Average Volume (3M): 340.53K
• Price to Earnings (P/E): 27.0
• Beta (1Y): 0.82
• Revenue Growth: 2.60%
• EPS Growth: 3.16%
• Country: CH
• Employees: 95,244
• Sector: Industrials
• Sector Strength: 89
• Industry: Consulting Services
• EPS (TTM): 1.87
• Shares Outstanding: 194,777,280
• 10 Day Avg. Volume: 299,417
• 30 Day Avg. Volume: 340,534
• PEG Ratio: 5.70
• Price to Book (P/B): 19.64
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 16.78
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: CHF88.71
• Price Target Upside: 7.19% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 73 Outperform
• Price Target: CHF93.00 ▲(12.37%Upside)

SGS SA's strong financial performance, highlighted by record cash generation and successful strategic initiatives, is the most significant factor driving the score. While the high debt levels pose a risk, the company's solid profitability and positive earnings outlook support its valuation. Technical analysis suggests neutral momentum, balancing the overall stock score.

SGS SA Business Overview & Revenue Model

Company Description

SGS SA (SGSN) is a leading global inspection, verification, testing, and certification company. Operating across various sectors, SGS provides services that help organizations improve quality, safety, and productivity while reducing risk. The company offers a wide array of services such as laboratory testing, inspection, and certification to industries including agriculture, mining, oil and gas, and consumer goods, ensuring compliance with regulatory standards and enhancing operational performance.

How the Company Makes Money

SGS SA generates revenue through a diverse portfolio of services including inspection, testing, and certification. The company's primary revenue streams come from fees charged for these services, which are essential for clients in various industries to ensure compliance with standards and regulations. SGS operates through a network of offices and laboratories worldwide, enabling it to serve clients globally. Additionally, partnerships with industries in sectors such as consumer goods, oil and gas, and agriculture contribute significantly to its earnings by providing tailored solutions that help clients meet industry-specific challenges and regulatory requirements. SGS's reputation for quality and reliability allows it to maintain long-term relationships with a broad range of clients, which is crucial for sustaining its revenue model.

SGS SA Financial Statement Overview

Summary

SGS SA shows strong profitability and cash flow generation with stable revenue growth and high returns on equity. However, significant leverage and slight declines in EBIT and EBITDA margins pose potential risks to financial stability.

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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 82.76
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:SGSN, the sentiment is Positive. The current price of 82.76 is above the 20-day moving average (MA) of 82.33, below the 50-day MA of 84.10, and below the 200-day MA of 85.58, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 53.44 is Neutral, neither overbought nor oversold. The STOCH value of 57.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CH:SGSN.

SGS SA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KNIN	74 Outperform	CHF20.34B	16.92		4.82%	13.34%	-4.15%
SGSN	73 Outperform	CHF16.22B	27.03		3.83%	2.60%	3.16%
FHZN	73 Outperform	CHF7.13B	21.82	11.24%	4.74%	7.28%	7.39%
SUN	72 Outperform	CHF5.04B	19.29	22.45%	2.85%	7.58%	14.41%
ADEN	71 Outperform	CHF4.35B	15.81		3.85%	-4.20%	-6.26%
DKSH	68 Neutral	CHF3.81B	19.49		3.28%	2.66%	2.91%
Sector *	67 Neutral	£2.87B	10.55	4.69%	4.42%	2.40%	-24.48%