SAP AG (SAP) AI Stock Analysis

• Market Cap: $338.60B
• Dividend Yield: 0.9%
• Average Volume (3M): 1.34M
• Price to Earnings (P/E): 47.8
• Beta (1Y): 0.95
• Revenue Growth: 10.95%
• EPS Growth: 161.61%
• Country: US
• Employees: 108,187
• Sector: Technology
• Sector Strength: 98
• Industry: Software - Application
• EPS (TTM): 1.76
• Shares Outstanding: 1,228,504,300
• 10 Day Avg. Volume: 1,404,775
• 30 Day Avg. Volume: 1,337,725
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.06
• Enterprise Value/Revenue: 9.98
• Enterprise Value/Gross Profit: 13.57
• Enterprise Value/Ebitda: 33.09
• 1Y Price Target: $340.00
• Price Target Upside: 16.39% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 75 Outperform
• Price Target: $323.00 ▲(10.57% Upside)

SAP's overall stock score reflects strong financial performance and positive earnings call highlights, particularly in cloud growth and strategic partnerships. However, high valuation metrics and mixed technical indicators temper the score, alongside challenges from global market uncertainties.

Positive Factors

Cloud Revenue

SAP delivered a solid revenue quarter with cloud revenue accelerating towards the upper end of FY guidance.

Financial Position

Profitability was a stand-out, with both operating margin and free cash flow well above Street estimates.

Pipeline and Guidance

SAP has a strong pipeline for H2, which supports the company's FY guidance.

Negative Factors

Decision Making Delays

There is risk from delays in decision making in the US public sector and manufacturing industry, which could impact SAP's conversion ratios.

Foreign Exchange Impact

Foreign exchange emerged as a material headwind with management guiding for a -300bps headwind.

Macro and FX Headwinds

The company is facing near-term macro and FX related headwinds that affect revenue estimates.

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 AG primarily makes money through the sale of software licenses, cloud subscriptions, and support services. The company's revenue model includes traditional on-premise software licenses, which involve a one-time fee and ongoing maintenance charges, as well as cloud-based offerings that generate recurring subscription fees. Key revenue streams include SAP's flagship ERP solutions, such as SAP S/4HANA, as well as other software products for analytics, human resources, and customer experience management. Additionally, SAP partners with other technology firms to expand its market reach and enhance its product offerings, contributing to its earnings. The shift towards cloud-based solutions has become increasingly significant for SAP's growth strategy, as it aligns with industry trends towards digital transformation.

SAP AG Financial Statement Overview

Summary

SAP demonstrates strong financial health with consistent revenue growth, effective cost management, and robust cash flows. However, the increase in debt and decline in net income are potential risks.

Income Statement

SAP's income statement shows strong performance with a consistent revenue growth trend over the years. The Gross Profit Margin and Net Profit Margin have remained healthy, indicating effective cost management and profitability. EBIT and EBITDA margins are robust, reflecting operational efficiency. However, the decline in net income from 2023 to 2024 is a concern that needs monitoring.

Balance Sheet

The balance sheet reflects a stable financial position with a solid equity base. The Debt-to-Equity ratio is manageable, suggesting prudent leverage. The Return on Equity remains strong, indicating good returns for shareholders. The Equity Ratio is healthy, showing a strong asset base. However, the increase in total debt from 2023 to 2024 requires attention to ensure long-term solvency.

Cash Flow

SAP's cash flow statement indicates strong operating cash flows, with a positive Free Cash Flow, supporting future growth investments. The Free Cash Flow to Net Income ratio remains favorable, demonstrating cash generation capability. While the Free Cash Flow growth rate dipped from 2023 to 2024, the overall cash flow health remains robust.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	34.18B	31.21B	29.52B	26.95B	27.34B
Gross Profit	24.93B	22.60B	21.48B	19.73B	19.45B
EBITDA	6.47B	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	13.09B	15.15B	15.46B
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 AG Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 292.12
• 50DMA: Negative
• 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 SAP, the sentiment is Positive. The current price of 292.12 is below the 20-day moving average (MA) of 293.98, below the 50-day MA of 298.13, and above the 200-day MA of 271.29, indicating a neutral trend. The MACD of -2.71 indicates Negative momentum. The RSI at 48.36 is Neutral, neither overbought nor oversold. The STOCH value of 78.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	$181.48B	109.82	16.95%	―	21.12%	43.91%
INTU	78 Outperform	$208.93B	60.95	17.84%	0.56%	14.99%	12.89%
CRM	77 Outperform	$229.93B	37.62	10.31%	0.68%	7.97%	14.85%
SAP	75 Outperform	$338.60B	47.84	15.34%	0.90%	10.95%	161.61%
WDAY	72 Outperform	$59.29B	122.62	5.70%	―	15.38%	-67.58%
TEAM	67 Neutral	$44.24B	―	-21.58%	―	19.12%	-161.42%
Sector *	57 Neutral	HK$14.16B	10.67	-2.83%	4.83%	9.36%	-49.67%