Sage Group (SGPYY) AI Stock Analysis

Compare

32 Followers

Top Page

Sage Group

(OTC:SGPYY)

Rating:68Neutral

Price Target:

$65.00

▲(10.77% Upside)

Sage Group's overall stock score is driven by its strong financial performance and positive earnings call insights. However, the bearish technical indicators and relatively high valuation limit the score. The company's growth prospects are promising, but macroeconomic uncertainties and reliance on debt warrant caution.

Sage Group (SGPYY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$13.86B

Dividend Yield1.87%

Average Volume (3M)2.10K

Price to Earnings (P/E)32.5

Beta (1Y)0.56

Revenue Growth9.34%

EPS Growth34.98%

CountryUS

Employees10,740

SectorTechnology

Sector Strength84

IndustrySoftware - Application

Share Statistics

EPS (TTM)1.09

Shares Outstanding240,783,890

10 Day Avg. Volume1,299

30 Day Avg. Volume2,098

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.22

Enterprise Value/Revenue7.28

Enterprise Value/Gross Profit7.85

Enterprise Value/Ebitda30.05

Forecast

1Y Price Target

$65.00

Price Target Upside10.77% Upside

Rating ConsensusHold

Number of Analyst Covering1

Sage Group Business Overview & Revenue Model

Company DescriptionSage Group plc is a leading provider of business management software and services, primarily targeting small and medium-sized enterprises (SMEs). The company operates in the technology sector and specializes in cloud-based solutions, including accounting, payroll, and enterprise resource planning (ERP) systems. Sage's core products aim to simplify financial management and streamline operations for businesses, enhancing productivity and compliance.

How the Company Makes MoneySage 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 Earnings Call Summary

Earnings Call Date:May 15, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Nov 19, 2025

Earnings Call Sentiment Positive

The earnings call highlights significant achievements in revenue growth, margin expansion, and product development, particularly in cloud services and Sage Intacct. The company maintains a strong cash position and continues to innovate with AI-driven solutions like Sage Copilot. However, macroeconomic uncertainty and a slight deceleration in recurring revenue growth pose challenges.

Q2-2025 Updates

Positive Updates

Strong Revenue Growth

Sage achieved total revenue growth of 9%, with recurring revenue growing by 10%.

Operating Margin Expansion

Operating profit margin increased to 23.2%, an expansion of 140 basis points.

EPS Increase

Earnings Per Share (EPS) increased by 17%.

Cash Conversion

The company delivered cash conversion of 115%, driven by growth in subscription revenue.

Cloud Product Growth

Sage Business Cloud revenue increased by 13%, with cloud native revenue up 22%.

Regional Performance

North America delivered revenue growth of 11%, UKIA grew by 9%, and Europe by 8%.

Sage Intacct Growth

In the UKIA region, Sage Intacct's revenue increased by over 60%.

Sage Copilot Success

Sage Copilot is driving productivity and insights, available to 40,000 customers in the UK.

Share Buyback Program

Announced a 200 million extension to the share buyback program.

Negative Updates

Macroeconomic Uncertainty

The company faces a volatile and uncertain macroeconomic environment.

Recurring Revenue Growth Deceleration

Recurring revenue organic growth decelerated to around 9% in the second quarter.

Company Guidance

The recent call provided guidance for Sage's financial outlook, emphasizing strong performance in the first half of the fiscal year 2025. Key metrics highlighted included a total revenue growth of 9%, with an 11% increase in annual recurring revenue (ARR), showcasing robust sales momentum. The operating profit margin expanded by 140 basis points to 23.2%, driving a 17% rise in earnings per share (EPS) and a 7% increase in the interim dividend to 7.45 pence. The company maintained a leverage ratio of 1.5, indicating a solid financial position. Looking ahead, Sage expects organic revenue growth for FY25 to be 9% or above, with operating margins trending upwards, supported by efficient scaling and disciplined cost management. The company is also focusing on AI-driven innovations, particularly through Sage Copilot, which aims to enhance productivity and decision-making for small and mid-sized businesses.

Sage Group Financial Statement Overview

Summary

Sage Group exhibits a strong financial profile with consistent revenue growth, high profitability margins, and robust cash flow generation. The Income Statement score is high due to increasing revenue and profitability, while the Balance Sheet reflects a solid position despite moderate debt reliance. Cash Flow is excellent, indicating strong cash generation. Overall, the company's financials suggest it is well-positioned for sustainable growth, with potential risks mitigated by strong operational performance.

Income Statement

Very Positive

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

Positive

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

Very Positive

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	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	2.33B	2.18B	1.95B	1.85B	1.90B
Gross Profit	2.16B	2.03B	1.81B	1.72B	1.78B
EBITDA	565.00M	456.00M	464.00M	458.00M	538.00M
Net Income	323.00M	211.00M	260.00M	285.00M	310.00M
Balance Sheet
Total Assets	3.64B	3.94B	3.90B	3.33B	3.71B
Cash, Cash Equivalents and Short-Term Investments	508.00M	696.00M	489.00M	553.00M	831.00M
Total Debt	1.25B	1.26B	1.22B	814.00M	990.00M
Total Liabilities	2.54B	2.53B	2.50B	2.22B	2.06B
Stockholders Equity	1.09B	1.41B	1.40B	1.11B	1.65B
Cash Flow
Free Cash Flow	454.00M	365.00M	233.00M	320.00M	366.00M
Operating Cash Flow	491.00M	387.00M	285.00M	376.00M	406.00M
Investing Cash Flow	-41.00M	-36.00M	-284.00M	62.00M	179.00M
Financing Cash Flow	-610.00M	-114.00M	-127.00M	-694.00M	-88.00M

Sage Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price58.68

Price Trends

50DMA

63.52

Negative

100DMA

64.84

Negative

200DMA

64.11

Negative

Market Momentum

MACD

-1.57

Negative

RSI

38.84

Neutral

STOCH

41.55

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 58.68 is below the 20-day moving average (MA) of 59.24, below the 50-day MA of 63.52, and below the 200-day MA of 64.11, indicating a bearish trend. The MACD of -1.57 indicates Negative momentum. The RSI at 38.84 is Neutral, neither overbought nor oversold. The STOCH value of 41.55 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

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MANH	80 Outperform	$12.69B	60.01	85.16%	―	6.13%	9.17%
PAYC	78 Outperform	$12.97B	30.32	25.76%	0.67%	10.21%	-10.56%
DOCU	77 Outperform	$15.41B	14.41	14.23%	―	8.29%	-71.36%
PCTY	75 Outperform	$9.62B	43.42	20.04%	―	13.74%	10.99%
BSY	69 Neutral	$16.32B	68.67	23.69%	0.48%	10.45%	-32.43%
SGPYY	68 Neutral	$13.86B	32.46	36.79%	1.87%	9.34%	34.98%
Sector *	61 Neutral	$35.52B	8.84	-11.06%	1.87%	8.55%	-8.14%

* Technology Sector Average

Performance Comparison

SGPYY

Sage Group

58.68

7.13

13.83%

MANH

Manhattan Associates

215.31

-39.77

-15.59%

PAYC

Paycom

224.12

61.35

37.69%

PCTY

Paylocity

174.40

17.87

11.42%

DOCU

DocuSign

79.86

23.82

42.51%

BSY

Bentley Systems

53.80

7.72

16.75%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025