SGS SA (SGSN) AI Stock Analysis

• Market Cap: CHF15.72B
• Dividend Yield: 3.95%
• Average Volume (3M): 318.27K
• Price to Earnings (P/E): 24.2
• Beta (1Y): 0.82
• Revenue Growth: 3.12%
• EPS Growth: 11.70%
• Country: CH
• Employees: 95,244
• Sector: Services
• Sector Strength: N/A
• Industry: Consulting Services
• EPS (TTM): 1.63
• Shares Outstanding: 194,777,280
• 10 Day Avg. Volume: 280,095
• 30 Day Avg. Volume: 318,267
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: CHF88.39
• Price Target Upside: 10.49% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 10

• Rating: 67 Neutral
• Price Target: CHF90.00 ▲(12.50% Upside)

SGS SA's overall stock score is driven by its solid financial performance, characterized by strong profitability and cash flow generation. However, the high leverage poses a financial risk. The technical analysis indicates a neutral trend, while the valuation suggests the stock is somewhat expensive, balanced by a decent dividend yield.

SGS SA Business Overview & Revenue Model

Company Description

SGS 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 Money

SGS generates revenue through a diversified model primarily driven by its service offerings. Key revenue streams include testing services, which involve assessing the quality and safety of products; inspection services, which ensure compliance with regulations and standards; and certification services, which validate that products and systems meet specific requirements. The company also earns income from consulting services and training programs. Significant partnerships with various industries, as well as a strong global presence, allow SGS to capture a wide customer base. Additionally, the company benefits from ongoing demand for quality assurance and compliance services, which is bolstered by increasing regulatory requirements and consumer awareness regarding product safety and sustainability.

SGS SA Financial Statement Overview

Summary

SGS SA exhibits solid financial performance with strong profitability and cash flow generation, reflecting stability in its operations. The company benefits from high returns on equity, but significant leverage suggests potential financial risk. Continued revenue growth and cash flow improvements are positives, though operational efficiency and debt management remain areas to watch.

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: Negative
• Last Price: 80.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 is below the 20-day moving average (MA) of 82.49, below the 50-day MA of 82.55, and below the 200-day MA of 84.52, indicating a bearish trend. The MACD of -0.33 indicates Positive momentum. The RSI at 40.74 is Neutral, neither overbought nor oversold. The STOCH value of 10.39 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CH:SGSN.

SGS SA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SGSN	67 Neutral	CHF15.72B	24.20		3.95%	3.12%	11.70%
Sector *	56 Neutral	$13.94B	13.72	10.03%	0.85%	7.13%	-12.93%
0QK3	―	CHF6.63B	56.89	5.71%	―	―	―
KNIN	70 Outperform	CHF19.33B	16.71		5.07%	13.42%	1.21%
DKSH	68 Neutral	CHF3.84B	19.25		4.06%	2.66%	2.91%
ADEN	65 Neutral	CHF4.29B	15.76		3.91%	-4.68%	-5.79%
0QLH	―	CHF7.12B	11.50	22.69%	―	―	―