SAP SE (SAP) AI Stock Analysis

• Market Cap: €289.15B
• Dividend Yield: 0.95%
• Average Volume (3M): 1.47M
• Price to Earnings (P/E): 50.4
• Beta (1Y): 1.01
• Revenue Growth: 10.51%
• EPS Growth: 203.70%
• Country: DE
• Employees: 108,187
• Sector: Technology
• Sector Strength: 83
• Industry: Software - Application
• EPS (TTM): 1.44
• Shares Outstanding: 1,228,504,300
• 10 Day Avg. Volume: 1,484,487
• 30 Day Avg. Volume: 1,472,054
• PEG Ratio: 0.98
• Price to Book (P/B): 6.80
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 56.84
• 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: €304.12
• Price Target Upside: 21.09% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 18

• Rating: 60 Neutral
• Price Target: €260.00 ▲(3.52%Upside)

SAP SE's overall stock score reflects a strong financial position with robust revenue growth and efficient cost management. However, technical indicators suggest bearish market sentiment, and a high P/E ratio raises concerns about potential overvaluation. The stock is currently oversold, which could present a buying opportunity if fundamentals remain strong.

Positive Factors

AI and Innovation

New AI innovation keeps SAP relevant with its customers.

Cloud Growth

SAP has quietly emerged as one of the fastest growing cloud segments across the software industry, with Cloud ERP now a €17B run-rate and 34% year-on-year growth.

Revenue and Margins

The cloud mix shift positions SAP to sustain double-digit revenue growth alongside improving margins that could compound free cash flow at 15-20% annually through 2030+.

Negative Factors

Free Cash Flow Expectations

The short-term hurdle to overcome is cons FCF which is likely 3-4% too high.

Near Term Earnings

The only minor caveat was potential near term free FY (Dec) CHANGE TO JEFe JEF vs CONS.

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 SE generates revenue primarily through the sale of software licenses, subscriptions, and related services. The company's revenue model is based on a combination of on-premise software licenses and cloud-based subscriptions. SAP's key revenue streams include software licenses and support, cloud subscriptions and services, and professional services. Software licenses and support involve upfront fees for software licenses and recurring revenue from maintenance and support contracts. Cloud subscriptions and services provide a steady stream of recurring revenue from customers who use SAP's cloud offerings, such as SAP S/4HANA Cloud and SAP Business Technology Platform. Professional services include consulting, training, and implementation services that help customers optimize their use of SAP solutions. Additionally, SAP has strategic partnerships with major technology companies and system integrators that enhance its product offerings and broaden its market reach, contributing to its revenue growth.

SAP SE Financial Statement Overview

Summary

SAP SE exhibits strong revenue growth and efficient cost management with a healthy balance sheet characterized by low leverage and high equity. While cash flow generation remains robust, the decline in free cash flow suggests monitoring future liquidity. Overall, SAP SE maintains a solid financial position, with potential for improved profitability metrics and cash flow stability in the future.

Income Statement

SAP SE demonstrated a solid revenue growth rate of 9.5% over the past year, indicating strong performance in its industry. The Gross Profit Margin remains robust at 73.2%, showcasing efficient cost management. However, the Net Profit Margin decreased due to a drop in net income compared to the previous year, from 19.7% to 9.1%. The EBIT Margin improved to 24.1%, suggesting enhanced operational efficiency. Overall, strong growth and operational efficiency, with some concerns on profit margins.

Balance Sheet

The company's Debt-to-Equity Ratio is relatively low at 0.25, indicating a conservative leverage approach and a stable financial structure. The Return on Equity (ROE) is 6.9%, which is moderate and suggests room for improvement in generating shareholder returns. The Equity Ratio is strong at 61.3%, highlighting a solid equity base and financial stability. Overall, the balance sheet reflects low financial risk and a strong equity position.

Cash Flow

Operating Cash Flow to Net Income Ratio stands at 1.67, indicating strong cash generation relative to net income. The Free Cash Flow to Net Income Ratio is 1.42, further reinforcing the company's capability to generate cash. However, the Free Cash Flow decreased by 20.3% compared to the previous year, which could be a concern for ongoing investments. Overall, the company shows strong cash flow generation but needs to address declining free cash flow.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
35.15B	34.18B	31.21B	30.87B	27.84B	27.34B
	Gross Profit
25.82B	25.01B	22.60B	21.94B	19.89B	19.45B
	EBIT
8.98B	8.25B	5.79B	4.67B	2.88B	6.62B
	EBITDA
10.91B	7.08B	7.50B	6.48B	8.92B	8.26B
	Net Income Common Stockholders
5.73B	3.12B	6.14B	2.28B	5.26B	5.14B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
12.98B	11.24B	11.28B	9.86B	11.66B	6.95B
	Total Assets
75.63B	74.12B	68.33B	72.16B	71.17B	58.48B
	Total Debt
0.00	10.65B	8.79B	14.37B	15.15B	15.95B
	Net Debt
-11.35B	1.04B	666.00M	5.37B	6.25B	10.64B
	Total Liabilities
29.54B	28.31B	24.93B	29.31B	29.65B	28.55B
	Stockholders Equity
45.71B	45.44B	43.16B	40.13B	38.85B	29.71B
Cash Flow		Free Cash Flow
5.47B	4.42B	5.55B	4.77B	5.42B	6.38B
	Operating Cash Flow
6.24B	5.22B	6.33B	5.65B	6.22B	7.19B
	Investing Cash Flow
516.00M	-667.00M	906.00M	667.00M	-3.06B	-2.99B
	Financing Cash Flow
-4.61B	-3.40B	-7.73B	-6.34B	-56.00M	-4.00B

SAP SE Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 251.15
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 251.15 is below the 20-day moving average (MA) of 262.29, below the 50-day MA of 254.19, and above the 200-day MA of 238.90, indicating a neutral trend. The MACD of -1.73 indicates Positive momentum. The RSI at 39.92 is Neutral, neither overbought nor oversold. The STOCH value of 7.53 is Positive, 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
Sector *	62 Neutral	$11.91B	9.99	-7.22%	4.96%	7.31%	-8.91%
SAP	60 Neutral	€289.15B	50.42	12.91%	0.95%	10.51%	203.70%
0N66		€2.18B	48.02	64.04%	1.35%	―	―
0FDT		€13.41B	75.90	21.00%	0.47%	―	―
TMV	68 Neutral	€1.47B	11.28	165.16%	―	8.08%	23.39%
BSS		€101.94M	47.01		―	―	―
MUM	77 Outperform	€900.52M	29.82	31.87%	3.52%	-9.10%	1.20%