SAP AG (SAP) AI Stock Analysis

• Market Cap: $307.52B
• Dividend Yield: 1%
• Average Volume (3M): 1.85M
• Price to Earnings (P/E): 43.0
• Beta (1Y): 0.95
• Revenue Growth: 10.95%
• EPS Growth: 161.61%
• Country: US
• Employees: 108,187
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.76
• Shares Outstanding: 1,228,000,000
• 10 Day Avg. Volume: 2,221,763
• 30 Day Avg. Volume: 1,846,364
• 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: 1.16
• Enterprise Value/Revenue: 9.98
• Enterprise Value/Gross Profit: 13.57
• Enterprise Value/Ebitda: 33.09
• 1Y Price Target: $344.25
• Price Target Upside: 30.36% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 74 Outperform
• Price Target: $322.00 ▲(21.93% Upside)

SAP's overall stock score is driven by strong financial performance and positive earnings call insights, highlighting robust growth in cloud revenue and strategic partnerships. However, the high P/E ratio suggests overvaluation, and technical indicators point to potential short-term weakness. Global market uncertainties and challenges in traditional software sales also pose risks.

Positive Factors

Cloud Revenue Growth

The robust growth in cloud revenue indicates SAP's successful transition to a cloud-based model, providing recurring revenue and enhancing long-term business stability.

Strategic Partnerships

Strategic partnerships with major companies enhance SAP's market reach and competitive edge, supporting sustained revenue growth and innovation.

Cash Flow Generation

Strong cash flow generation supports SAP's ability to invest in growth opportunities and return value to shareholders, ensuring financial flexibility.

Negative Factors

Global Market Uncertainty

Global market uncertainties can affect SAP's sales cycles and revenue stability, posing risks to consistent growth and operational planning.

Decline in Software Licenses Revenue

The decline in traditional software license revenue highlights challenges in transitioning fully to cloud solutions, impacting overall revenue diversification.

Impact of Trade Policies

Trade policy impacts can delay sales processes and affect revenue timing, creating potential volatility in financial performance.

SAP AG Business Overview & Revenue Model

Company Description

SAP SE, together with its subsidiaries, provides applications, technology, and services worldwide. It offers SAP S/4HANA that provides software capabilities for finance, risk and project management, procurement, manufacturing, supply chain and asset management, and research and development; SAP SuccessFactors solutions for human resources, including HR and payroll, talent and employee experience management, and people and workforce analytics; and spend management solutions that covers direct and indirect spend, travel and expense, and external workforce management. The company also provides SAP customer experience solutions; SAP Business Technology platform that enables customers and partners to build, integrate, and automate applications; and SAP Business Network, a business-to-business collaboration platform that helps digitalize key business processes across the supply chain and enables communication between trading partners. In addition, it offers SAP Signavio to help customers to discover, analyze, and understand their business process operations; SAP's industry cloud solutions that provides modular solutions addressing industry-specific functions; Taulia solutions for working capital management to help enable customers mitigate the effects of inflation by providing visibility into working capital and access to liquidity; and sustainability solutions and services. SAP SE was founded in 1972 and is headquartered in Walldorf, Germany.

How the Company Makes Money

SAP generates revenue primarily through software licenses, cloud subscriptions, and support services. The company has shifted its focus towards cloud-based offerings, which provide recurring subscription revenue. Key revenue streams include software licenses for on-premise solutions, maintenance and support services for existing software, and cloud services, which encompass platform-as-a-service (PaaS) and software-as-a-service (SaaS) solutions. Additionally, SAP benefits from strategic partnerships with major technology companies and system integrators, enhancing its market reach and enabling collaborative solutions. The growing demand for digital transformation across industries has also contributed to SAP's earnings, as organizations increasingly invest in integrated software solutions to streamline operations and improve efficiency.

SAP AG Financial Statement Overview

Summary

SAP exhibits strong financial health with impressive growth in revenue and profitability metrics. The balance sheet is solid with low leverage, providing stability. Cash flow generation is robust, supporting strategic investments and shareholder returns. While the financial outlook remains positive, close attention should be paid to maintaining equity levels amidst dynamic market conditions.

Income Statement

SAP's income statement shows a solid financial performance with a consistent growth trajectory. The TTM (Trailing-Twelve-Months) total revenue increased to $35.89 billion, reflecting continuous expansion. The gross profit margin stands at 73.5%, indicating efficient cost management. The net profit margin improved to 18.4%, showcasing strong profitability. EBIT and EBITDA margins were healthy at 25.1% and 30.2%, respectively, supporting robust operational efficiency.

Balance Sheet

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.21, indicating low leverage and prudent financial management. The equity ratio is 59.9%, showing a solid capital structure. Return on equity (ROE) is strong at 16.1%, underscoring efficient use of equity capital. However, the slight decrease in stockholders' equity over the periods warrants monitoring.

Cash Flow

SAP's cash flow statement highlights a positive trend with a TTM operating cash flow of $7.28 billion. The free cash flow to net income ratio is 0.98, demonstrating effective conversion of earnings to cash flow. Free cash flow growth rate is notable at 46.8% over the previous period, indicating robust cash generation capabilities. The operating cash flow to net income ratio is healthy at 1.1, reflecting strong cash profitability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	35.89B	34.18B	31.21B	29.52B	26.95B	27.34B
Gross Profit	26.38B	24.93B	22.60B	21.48B	19.73B	19.45B
EBITDA	10.82B	6.47B	7.50B	6.48B	8.92B	8.26B
Net Income	6.59B	3.12B	6.14B	2.28B	5.26B	5.14B
Balance Sheet
Total Assets	68.40B	74.12B	68.33B	72.16B	71.17B	58.48B
Cash, Cash Equivalents and Short-Term Investments	10.18B	11.24B	11.28B	9.86B	11.66B	6.95B
Total Debt	8.76B	10.65B	8.79B	13.09B	15.15B	15.46B
Total Liabilities	27.00B	28.31B	24.93B	29.31B	29.65B	28.55B
Stockholders Equity	41.00B	45.44B	43.16B	40.13B	38.85B	29.71B
Cash Flow
Free Cash Flow	6.49B	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	-394.96M	-667.00M	906.00M	667.00M	-3.06B	-2.99B
Financing Cash Flow	-6.04B	-3.40B	-7.73B	-6.34B	-56.00M	-4.00B

SAP AG Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 264.08
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAP, the sentiment is Negative. The current price of 264.08 is below the 20-day moving average (MA) of 264.91, below the 50-day MA of 276.28, and below the 200-day MA of 277.02, indicating a bearish trend. The MACD of -3.24 indicates Negative momentum. The RSI at 45.37 is Neutral, neither overbought nor oversold. The STOCH value of 70.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SAP.

SAP AG Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NOW	79 Outperform	194.69B	117.81	15.19%	―	21.12%	43.91%
CRM	77 Outperform	231.75B	34.99	10.86%	0.68%	8.33%	19.69%
INTU	74 Outperform	194.68B	50.67	19.63%	0.60%	15.63%	30.62%
SAP	74 Outperform	$307.52B	43.04	15.34%	1.00%	10.95%	161.61%
WDAY	71 Outperform	65.86B	114.08	6.36%	―	14.21%	-62.56%
TEAM	58 Neutral	43.72B	-169.70	-19.08%	―	19.66%	15.17%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%