Sage Group (SGPYY) AI Stock Analysis

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Sage Group

(OTC:SGPYY)

Rating:74Outperform

Price Target:

$72.00

▲(15.31% Upside)

Sage Group has a strong financial performance and positive earnings call guidance, indicating robust growth and operational efficiency. However, technical analysis suggests potential short-term downside, and the high P/E ratio implies the stock might be overvalued. Macroeconomic uncertainties could pose risks.

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

Market Cap

$14.93B

Dividend Yield1.75%

Average Volume (3M)1.04K

Price to Earnings (P/E)35.1

Beta (1Y)0.57

Revenue Growth9.34%

EPS Growth34.98%

CountryUS

Employees10,740

SectorTechnology

Sector Strength98

IndustrySoftware - Application

Share Statistics

EPS (TTM)1.09

Shares Outstanding240,857,060

10 Day Avg. Volume0

30 Day Avg. Volume1,044

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 Cap1.14

Enterprise Value/Revenue7.28

Enterprise Value/Gross Profit7.85

Enterprise Value/Ebitda30.05

Forecast

1Y Price Target

$72.00

Price Target Upside15.31% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering0

Sage Group Business Overview & Revenue Model

Company DescriptionSage Group (SGPYY) is a global leader in providing integrated accounting, payroll, and payment systems for small and medium-sized enterprises (SMEs). Headquartered in Newcastle upon Tyne, United Kingdom, Sage's software solutions are designed to simplify business processes, enhance productivity, and improve financial management. Sage operates across multiple sectors, including financial management, human resources, and enterprise resource planning (ERP), offering cloud-based and on-premise solutions that cater to diverse business needs.

How the Company Makes MoneySage Group generates revenue primarily through the sale of software subscriptions and licenses. The company's key revenue streams include recurring revenue from cloud-based solutions, which have been a focus of growth as businesses increasingly shift to digital and cloud environments. Sage also earns from maintenance and support contracts, professional services like training and implementation, and transactional fees from its payment processing solutions. Significant partnerships with other technology companies and financial institutions enhance its product offerings and expand its market reach, contributing to its earnings.

Sage Group Earnings Call Summary

Earnings Call Date:May 15, 2025

(Q2-2025)

% Change Since: -7.84%|

Next Earnings Date:Nov 19, 2025

Earnings Call Sentiment Positive

The earnings call highlighted Sage's strong revenue growth, operating margin expansion, and successful adoption of cloud products and AI solutions. Despite the positive results, there is a note of caution due to the uncertain macroeconomic environment.

Q2-2025 Updates

Positive Updates

Strong Revenue Growth

Total revenue growth of 9% in the first half, driven by a strong subscription-based model.

Operating Margin and EPS Expansion

Operating profit margin increased to 23.2%, an expansion of 140 basis points, and EPS increased by 17%.

Cloud Products Driving Growth

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

Regional Performance

North America revenue growth of 11%, UKIA growth at 9%, and Europe growth at 8%.

Sage Copilot Adoption

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

Cash Conversion and Share Buyback

Cash conversion of 115% and announcement of a 200 million extension to the share buyback program.

Negative Updates

Macroeconomic Uncertainty

Volatile and uncertain macroeconomic conditions impacting business outlook.

Company Guidance

In the call, Sage provided guidance for strong financial performance in the first half of fiscal year 2025, with total revenue growth of 9% and an 11% increase in Annualized Recurring Revenue (ARR) to £2.5 billion. The company achieved an operating profit margin of 23.2%, a 140 basis points expansion, and a 17% rise in Earnings Per Share (EPS). Sage's cash conversion was notably strong at 115%, driven by effective subscription revenue growth and working capital management. The company also increased its interim dividend by 7% to 7.45 pence per share. Looking ahead, Sage anticipates organic revenue growth of at least 9% for the full year, with operating margins expected to trend upward as it continues to efficiently scale operations. The guidance reflects confidence in the resilience of Sage's business model despite macroeconomic uncertainties.

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 Price62.44

Price Trends

50DMA

66.82

Negative

100DMA

65.16

Negative

200DMA

63.44

Negative

Market Momentum

MACD

-1.09

Positive

RSI

32.96

Neutral

STOCH

11.26

Positive

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 62.44 is below the 20-day moving average (MA) of 65.79, below the 50-day MA of 66.82, and below the 200-day MA of 63.44, indicating a bearish trend. The MACD of -1.09 indicates Positive momentum. The RSI at 32.96 is Neutral, neither overbought nor oversold. The STOCH value of 11.26 is Positive, 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 (56)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYC	83 Outperform	$13.30B	31.10	25.76%	0.65%	9.86%	-14.34%
SSNC	78 Outperform	$21.20B	27.34	12.07%	1.15%	6.75%	15.99%
PCTY	76 Outperform	$9.76B	44.05	20.04%	―	13.74%	10.99%
MANH	75 Outperform	$12.44B	57.35	85.16%	―	6.13%	9.17%
SGPYY	74 Outperform	$14.93B	35.12	36.79%	1.75%	9.34%	34.98%
BSY	66 Neutral	$16.24B	68.35	23.69%	0.49%	10.45%	-32.43%
Sector *	56 Neutral	$293.51M	11.56	-16.39%	2.54%	10.38%	-44.70%

* Technology Sector Average

Performance Comparison

SGPYY

Sage Group

62.44

11.75

23.18%

MANH

Manhattan Associates

205.80

-41.27

-16.70%

SSNC

SS&C Technologies Holdings

86.80

17.14

24.61%

PAYC

Paycom

229.85

77.23

50.60%

PCTY

Paylocity

176.94

26.53

17.64%

BSY

Bentley Systems

53.49

5.42

11.28%

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: Jul 31, 2025