Sage Group (SGPYY) AI Stock Analysis

• Market Cap: $14.30B
• Dividend Yield: 1.92%
• Average Volume (3M): 4.49K
• Price to Earnings (P/E): 33.8
• Beta (1Y): 0.56
• Revenue Growth: 11.09%
• EPS Growth: 21.91%
• Country: US
• Employees: 10,740
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.21
• Shares Outstanding: 240,866,060
• 10 Day Avg. Volume: 2,093
• 30 Day Avg. Volume: 4,488
• PEG Ratio: 0.60
• Price to Book (P/B): 9.81
• Price to Sales (P/S): 4.60
• P/FCF Ratio: 23.62
• Enterprise Value/Market Cap: 1.19
• Enterprise Value/Revenue: 7.01
• Enterprise Value/Gross Profit: 7.56
• Enterprise Value/Ebitda: 28.25
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 77 Outperform
• Price Target: $69.00 ▲(20.82% Upside)

Sage Group's strong financial performance and positive earnings call sentiment are significant strengths, driving the overall score. However, the high valuation and neutral technical indicators temper the outlook. The company's focus on innovation and growth in cloud services is promising, but macroeconomic uncertainties and debt reliance require careful monitoring.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term financial stability.

Cloud Product Growth

Growth in cloud services reflects successful adaptation to industry trends and positions Sage well in the evolving tech landscape.

Cash Generation

Strong cash conversion from operations enhances financial flexibility, enabling reinvestment and debt management.

Negative Factors

Macroeconomic Uncertainty

Economic volatility can impact customer spending and business investment, posing risks to revenue and profitability.

Recurring Revenue Growth Deceleration

Slowing growth in recurring revenue could indicate market saturation or increased competition, affecting future earnings.

Debt Dependency

Reliance on debt can strain financial resources and limit strategic flexibility, especially in uncertain economic conditions.

Sage Group Business Overview & Revenue Model

Company Description

The Sage Group plc, together with its subsidiaries, provides technology solutions and services for small and medium businesses in North America, Northern Europe, and internationally. It offers cloud native solutions, such as Sage Intacct, a cloud accounting software products and financial management solutions; Sage People, a cloud HR and people management solution; Sage Accounting, a solution for small businesses, accountants, and bookkeepers to remotely manage customer data, accounts, and people; Sage Payroll, a cloud-based payroll solution; and Sage HR, a HR management solution. The company also provides cloud connected and hybrid solutions, including Sage X3, a business management solution; and Sage 50cloud and Sage 200cloud that provides a range of cloud connected accounting solutions. The company was founded in 1981 and is based in Newcastle upon Tyne, the United Kingdom.

How the Company Makes Money

Sage Group generates revenue primarily through subscription fees for its cloud-based software solutions, which are billed on a recurring basis. This subscription model provides a steady income stream as customers pay for ongoing access to the software and its updates. Additionally, Sage earns revenue from one-time licensing fees for its on-premise software products, as well as from professional services such as implementation, training, and customer support. Key revenue streams also include partnerships with financial institutions and other organizations that integrate Sage's software into their offerings, further expanding its market reach. The company is focused on transitioning more customers to its cloud solutions, which typically yield higher margins compared to traditional software sales.

Sage Group Financial Statement Overview

Summary

Sage Group demonstrates strong financial performance with consistent revenue growth, high profitability margins, and robust cash flow generation. The company maintains healthy leverage levels, but the relatively lower equity ratio indicates a dependency on debt which should be monitored.

Income Statement

The company shows a strong financial performance with increasing revenue and improved profitability. The Gross Profit Margin is high at 92.82%, indicating effective cost management. A healthy Net Profit Margin of 13.85% and a Revenue Growth Rate of 6.77% from the previous year highlight the company's growth trajectory. The EBIT and EBITDA Margins are robust at 19.38% and 24.22%, respectively, showcasing operational efficiency.

Balance Sheet

The balance sheet reflects a solid financial position with a Debt-to-Equity Ratio of 1.14, indicating manageable leverage. The Return on Equity is strong at 29.56%, reflecting good returns on shareholders' investments. However, the Equity Ratio of 30.05% suggests a moderate reliance on debt financing, which could pose a risk if not managed carefully.

Cash Flow

The cash flow statement indicates strong cash generation, with a significant Free Cash Flow Growth Rate of 24.38%. The Operating Cash Flow to Net Income Ratio is excellent at 1.52, suggesting efficient cash conversion from earnings. The Free Cash Flow to Net Income Ratio is also solid at 1.41, underscoring the company's ability to generate free cash flow relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.42B	2.33B	2.18B	1.95B	1.85B	1.90B
Gross Profit	2.25B	2.16B	2.03B	1.81B	1.72B	1.78B
EBITDA	601.00M	565.00M	456.00M	464.00M	458.00M	524.00M
Net Income	347.00M	323.00M	211.00M	260.00M	285.00M	310.00M
Balance Sheet
Total Assets	3.83B	3.64B	3.94B	3.90B	3.33B	3.71B
Cash, Cash Equivalents and Short-Term Investments	574.00M	508.00M	696.00M	489.00M	553.00M	831.00M
Total Debt	1.56B	1.25B	1.26B	1.22B	814.00M	990.00M
Total Liabilities	3.03B	2.54B	2.53B	2.50B	2.22B	2.06B
Stockholders Equity	799.00M	1.09B	1.41B	1.40B	1.11B	1.65B
Cash Flow
Free Cash Flow	473.00M	454.00M	365.00M	233.00M	320.00M	366.00M
Operating Cash Flow	531.00M	491.00M	387.00M	285.00M	376.00M	406.00M
Investing Cash Flow	-92.00M	-41.00M	-36.00M	-284.00M	62.00M	179.00M
Financing Cash Flow	-305.00M	-610.00M	-114.00M	-127.00M	-694.00M	-88.00M

Sage Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 57.11
• 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 SGPYY, the sentiment is Negative. The current price of 57.11 is below the 20-day moving average (MA) of 57.24, below the 50-day MA of 59.18, and below the 200-day MA of 62.48, indicating a bearish trend. The MACD of -0.77 indicates Negative momentum. The RSI at 45.23 is Neutral, neither overbought nor oversold. The STOCH value of 74.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SGPYY.

Sage Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYC	80 Outperform	$9.32B	20.60	28.56%	0.91%	9.72%	-2.69%
MANH	79 Outperform	$10.83B	51.04	73.58%	―	4.10%	-0.21%
SGPYY	77 Outperform	$14.30B	33.76	36.79%	1.92%	11.09%	21.91%
PCTY	71 Outperform	$7.97B	36.68	20.42%	―	13.30%	2.80%
DOCU	71 Outperform	$13.21B	45.96	15.22%	―	8.45%	-69.85%
BSY	71 Outperform	$13.11B	52.17	24.16%	0.65%	11.12%	-26.24%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%