SAP SE (SAP) AI Stock Analysis

• Market Cap: €303.22B
• Dividend Yield: 0.9%
• Average Volume (3M): 1.49M
• Price to Earnings (P/E): 52.9
• Beta (1Y): 1.00
• Revenue Growth: 10.51%
• EPS Growth: 203.70%
• Country: DE
• Employees: 108,187
• Sector: Technology
• Sector Strength: 93
• Industry: Software - Application
• EPS (TTM): 1.44
• Shares Outstanding: 1,228,504,300
• 10 Day Avg. Volume: 975,917
• 30 Day Avg. Volume: 1,485,021
• PEG Ratio: 0.96
• Price to Book (P/B): 6.63
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 55.45
• 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: €304.82
• Price Target Upside: 14.68% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 18

• Rating: 67 Neutral
• Price Target: €280.00 ▲(5.34%Upside)

SAP SE demonstrates strong financial performance and a solid balance sheet, though challenges in profitability and free cash flow need addressing. Technical indicators suggest a neutral trend, and high valuation metrics pose a risk. Limited dividend yield further impacts attractiveness.

Positive Factors

Cloud Transition

Rising migration urgency and tighter partner alignment indicate a positive outlook for SAP's cloud transition story.

Financial Performance

The company's shares trade at an attractive valuation, justified by unique growth acceleration and margin expansion driven by cloud transition.

Revenue 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.

Negative Factors

FX Movements

FX movements have been unfavorable, creating headwinds for SAP's financial estimates in 2025 and 2026.

Market Adjustments

Sell-side consensus is still slow to adjust FX and FCF.

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 to cloud-based services, and support services. The company offers both on-premise and cloud-based solutions, with a growing emphasis on cloud services due to the increasing demand for scalable and flexible business solutions. Key revenue streams include software licenses, cloud subscriptions and support, and professional services such as consulting and training. SAP has also formed strategic partnerships with major technology companies like Microsoft, Google, and Amazon Web Services to enhance its cloud offerings and expand its market reach. These partnerships, along with continuous innovation and development of new technologies, play a significant role in SAP's revenue growth and market presence.

SAP SE Financial Statement Overview

Summary

SAP SE shows strong revenue growth and cost management, with a robust balance sheet featuring low leverage and high equity. However, declining net profit margins and reduced free cash flow present areas for improvement.

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	34.18B	31.21B	30.87B	27.84B	27.34B
Gross Profit	25.01B	22.60B	21.94B	19.89B	19.45B
EBITDA	7.08B	7.50B	6.48B	8.92B	8.26B
Net Income	3.12B	6.14B	2.28B	5.26B	5.14B
Balance Sheet
Total Assets	74.12B	68.33B	72.16B	71.17B	58.48B
Cash, Cash Equivalents and Short-Term Investments	11.24B	11.28B	9.86B	11.66B	6.95B
Total Debt	10.65B	8.79B	14.37B	15.15B	15.95B
Total Liabilities	28.31B	24.93B	29.31B	29.65B	28.55B
Stockholders Equity	45.44B	43.16B	40.13B	38.85B	29.71B
Cash Flow
Free Cash Flow	4.42B	5.55B	4.77B	5.42B	6.38B
Operating Cash Flow	5.22B	6.33B	5.65B	6.22B	7.19B
Investing Cash Flow	-667.00M	906.00M	667.00M	-3.06B	-2.99B
Financing Cash Flow	-3.40B	-7.73B	-6.34B	-56.00M	-4.00B

SAP SE Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 265.80
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• 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 Positive. The current price of 265.8 is above the 20-day moving average (MA) of 257.75, above the 50-day MA of 260.78, and above the 200-day MA of 244.50, indicating a bullish trend. The MACD of 1.06 indicates Negative momentum. The RSI at 58.74 is Neutral, neither overbought nor oversold. The STOCH value of 54.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DE:SAP.

SAP SE Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SAP	67 Neutral	€303.22B	52.87	12.91%	0.90%	10.51%	203.70%
Sector *	63 Neutral	$34.26B	5.42	-11.67%	1.85%	5.30%	-18.55%
0N66	―	€2.24B	49.07	64.04%	1.52%	―	―
0FDT	―	€14.62B	82.24	21.00%	0.43%	―	―
TMV	68 Neutral	€1.49B	11.40	165.16%	―	8.08%	23.39%
BSS	―	$101.94M	47.01		―	―	―
MUM	70 Outperform	€908.94M	30.57	30.50%	3.42%	-9.10%	1.30%