SAP SE (SAP) AI Stock Analysis

• Market Cap: €222.64B
• Dividend Yield: 1.13%
• Average Volume (3M): 1.54M
• Price to Earnings (P/E): 32.2
• Beta (1Y): 1.04
• Revenue Growth: 9.70%
• EPS Growth: 161.70%
• Country: DE
• Employees: 108,187
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.62
• Shares Outstanding: 1,228,504,300
• 10 Day Avg. Volume: 1,114,652
• 30 Day Avg. Volume: 1,544,298
• PEG Ratio: -1.81
• Price to Book (P/B): 6.06
• Price to Sales (P/S): 8.06
• P/FCF Ratio: 62.29
• 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: €285.58
• Price Target Upside: 45.60% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 66 Neutral
• Price Target: €178.00 ▼(-9.25% Downside)

The score is primarily supported by strong financial performance, highlighted by improved TTM profitability and conservative leverage. This is tempered by mixed technical signals (negative MACD and longer-term trend below key moving averages) and a relatively expensive valuation (high P/E with only a modest dividend yield).

Positive Factors

Profitability Margins

Sustained high gross margins and a recent step-up in net and EBIT margins indicate durable earnings power. For an ERP and enterprise software leader, this margin profile supports ongoing R&D and platform investment, helping protect profitability across cycles.

Balance Sheet Strength

Conservative leverage and materially improved ROE enhance financial flexibility and lower refinancing risk. A stronger balance sheet allows multi-year investments, strategic M&A or weathering technology-cycle downturns without forcing disruptive capital moves.

Cash Generation Quality

Robust operating and free cash flow with high conversion means reported earnings are largely backed by cash, supporting sustainable capex, R&D and shareholder returns. Strong cash generation provides a durable funding source for strategic priorities.

Negative Factors

Free Cash Flow Growth

A meaningful decline in FCF growth over the TTM and 2024 signals cooling cash momentum despite high absolute FCF. If this trend persists it could constrain reinvestment in cloud infrastructure, M&A capacity, or the pace of strategic initiatives over the medium term.

Earnings Volatility

Pronounced swings in profitability across recent years reduce visibility for planning and capital allocation. Persistent earnings volatility complicates multi-year investments and may force higher liquidity buffers, limiting aggressive long-term deployment of resources.

Uneven Revenue Growth

Inconsistent top-line growth despite mid-single-digit recent rate undermines predictability for margins and cash flow. Uneven revenue trends may reflect a complex transition mix (licensing to cloud/subscriptions) and require sustained execution to normalize recurring revenue streams.

SAP SE Business Overview & Revenue Model

Company Description

SAP SE, together with its subsidiaries, operates as an enterprise application software company worldwide. The company operates through three segments: Applications, Technology & Support; Qualtrics; and Services. It offers SAP S/4HANA, an ERP suite with intelligent technologies, such as artificial intelligence, machine learning, and advanced analytics; SAP SuccessFactors Human Experience Management provides cloud-based solutions, such as a human resources management system for core HR and payroll, talent management, employee experience management, and people analytics; and intelligent spend management solutions, including products branded under the SAP Ariba, SAP Concur, and SAP Fieldglass names. The company also provides SAP customer experience solutions; SAP Business Technology platform that enables customers and partners to extend and customize SAP applications in a cloud-native way; and SAP Business Network that enable companies to extend their ecosystem, react to supply chain disruptions, discover new trading partners, and find new opportunities. In addition, it offers business process intelligence solutions aim to help customers analyze their operations, understand their process bottlenecks, and improve their business process landscape; Experience solutions; SAP's industry cloud provides modular solutions addressing industry-specific functions; and SAP's ecosystem build, sell, service, and run SAP solutions and technology, as well as sustainable business solutions, services, and partnerships solutions. SAP SE was founded in 1972 and is headquartered in Walldorf, Germany.

How the Company Makes Money

SAP generates revenue primarily through software licensing, cloud subscriptions, and maintenance services. The company offers various licensing models, including perpetual licenses and subscription-based licenses for its cloud offerings. A significant portion of revenue comes from its cloud services, which have seen rapid growth as businesses increasingly adopt cloud technologies. Additionally, SAP earns revenue from support and maintenance contracts for its software products, providing ongoing services and updates. The company also benefits from strategic partnerships with technology firms and system integrators, which enhance its market reach and capabilities, contributing to its overall earnings.

SAP SE Financial Statement Overview

Summary

Strong TTM profitability improvement (net margin ~19%, EBIT margin ~29%) and consistently high gross margins support earnings quality. Balance sheet leverage is conservative (debt-to-equity ~0.21) with improved ROE (~15.5%). Offsets include recent free cash flow growth decline (TTM -13.9%) and historical profit volatility.

Income Statement

TTM (Trailing-Twelve-Months) shows a clear profitability step-up versus the most recent annual period: net margin is ~19% (vs ~9% in 2024) and operating profitability is strong (EBIT margin ~29%, EBITDA margin ~32%). Gross margins remain consistently high in the low-to-mid 70% range, supporting resilient earnings power. Revenue growth is positive, but the pace has been uneven across years and the profit line has shown volatility (notably the drop in 2022 and 2024 before the TTM rebound), which tempers the score.

Balance Sheet

Leverage looks conservative: TTM debt-to-equity is ~0.21, improving materially from 2020–2022 levels, and equity has grown over time. Returns on equity are healthy in TTM (~15.5%) and improved versus 2024 (~6.9%), indicating better earnings efficiency. The main watch item is that total debt is still sizable in absolute terms, so sustained profitability and cash generation need to remain supportive even though the balance sheet structure is currently solid.

Cash Flow

Cash generation is strong in absolute terms (TTM operating cash flow ~€7.3B; free cash flow ~€6.5B), and free cash flow conversion to net income is high (~0.89), suggesting earnings are largely backed by cash. However, free cash flow growth is negative in TTM (-13.9%) and also declined in 2024, signaling some near-term cooling after prior improvement (e.g., 2023). Operating cash flow as a share of revenue is moderate based on the provided coverage figure, which keeps this score below the income statement strength.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	36.49B	34.18B	31.21B	29.52B	26.95B	27.34B
Gross Profit	26.84B	24.93B	22.53B	21.48B	19.73B	19.45B
EBITDA	11.82B	6.47B	7.16B	6.32B	10.33B	9.41B
Net Income	7.08B	3.12B	6.14B	2.28B	5.26B	5.14B
Balance Sheet
Total Assets	80.37B	74.12B	68.33B	72.16B	71.17B	58.46B
Cash, Cash Equivalents and Short-Term Investments	10.05B	11.24B	11.28B	9.70B	11.66B	6.95B
Total Debt	10.72B	10.65B	8.79B	13.09B	15.14B	15.46B
Total Liabilities	29.56B	28.31B	24.93B	29.31B	29.65B	28.54B
Stockholders Equity	50.30B	45.44B	43.16B	40.19B	38.85B	29.72B
Cash Flow
Free Cash Flow	6.45B	4.42B	5.55B	4.77B	5.42B	6.38B
Operating Cash Flow	7.28B	5.22B	6.33B	5.65B	6.22B	7.19B
Investing Cash Flow	-853.00M	-667.00M	906.00M	667.00M	-3.06B	-2.99B
Financing Cash Flow	-7.58B	-3.40B	-7.73B	-6.34B	-56.00M	-4.00B

SAP SE Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 196.14
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:SAP, the sentiment is Negative. The current price of 196.14 is below the 20-day moving average (MA) of 202.38, below the 50-day MA of 205.78, and below the 200-day MA of 234.27, indicating a bearish trend. The MACD of -3.67 indicates Positive momentum. The RSI at 41.77 is Neutral, neither overbought nor oversold. The STOCH value of 48.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DE:SAP.

SAP SE Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AOF	72 Outperform	€1.59B	34.64	74.27%	1.88%	10.61%	12.46%
MUM	69 Neutral	€747.35M	24.69	34.89%	4.15%	-33.50%	-6.00%
TMV	67 Neutral	€882.15M	7.72	113.84%	―	11.14%	0.92%
SAP	66 Neutral	€222.64B	32.19	16.86%	1.13%	9.70%	161.70%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
NEM	59 Neutral	€8.86B	43.40	24.84%	0.59%	25.17%	19.52%