Sage Group (SGPYY) AI Stock Analysis

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Sage Group

(OTC:SGPYY)

Rating:78Outperform

Price Target:

$75.00

▲(10.80%Upside)

Sage Group's stock is supported by strong financial performance and positive earnings call highlights, including robust revenue growth and margin expansion. The technical analysis indicates a generally bullish trend, although valuation metrics suggest the stock might be somewhat overvalued. Despite macroeconomic uncertainties, the company's strategic initiatives and guidance reflect confidence in continued growth, resulting in a favorable overall stock score.

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

Market Cap

$16.20B

Dividend Yield1.42%

Average Volume (3M)12.99K

Price to Earnings (P/E)37.8

Beta (1Y)0.63

Revenue Growth9.34%

EPS Growth34.98%

CountryUS

Employees10,740

SectorTechnology

Sector Strength83

IndustrySoftware - Application

Share Statistics

EPS (TTM)1.09

Shares Outstanding244,390,880

10 Day Avg. Volume13,971

30 Day Avg. Volume12,988

Financial Highlights & Ratios

PEG Ratio1.99

Price to Book (P/B)11.58

Price to Sales (P/S)0.00

P/FCF Ratio29.95

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Sage Group Business Overview & Revenue Model

Company DescriptionSage Group plc is a prominent British multinational enterprise software company headquartered in Newcastle upon Tyne, England. It specializes in providing business management software and services, primarily targeting small to medium-sized enterprises (SMEs). Sage's core offerings include accounting, enterprise resource planning (ERP), payroll, human resource management, and payment processing solutions. With a strong global presence, the company operates in various sectors, including finance, retail, manufacturing, and professional services, delivering solutions that help businesses streamline operations and drive growth.

How the Company Makes MoneySage Group generates revenue primarily through the sale of its software solutions and related services. The company employs a subscription-based model, where customers pay recurring fees for access to its cloud-based and on-premises software products. Key revenue streams include software licensing, maintenance, and support services. Additionally, Sage offers value-added services such as consulting, training, and implementation support, which contribute to its earnings. Strategic partnerships with technology providers and resellers also play a significant role in expanding Sage's market reach and enhancing its product offerings, further bolstering its revenue.

Sage Group Earnings Call Summary

Earnings Call Date:May 15, 2025

(Q2-2025)

% Change Since: -0.09%|

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. While the company maintains healthy leverage levels, the relatively lower equity ratio indicates a dependency on debt which should be monitored. 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.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
2.82B	2.33B	2.18B	1.95B	1.85B	1.90B
	Gross Profit
2.54B	2.16B	2.03B	1.81B	1.72B	1.78B
	EBIT
483.50M	452.00M	315.00M	367.00M	373.00M	404.00M
	EBITDA
529.50M	565.00M	456.00M	464.00M	458.00M	538.00M
	Net Income Common Stockholders
421.00M	323.00M	211.00M	260.00M	285.00M	310.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
448.00M	508.00M	696.00M	489.00M	553.00M	831.00M
	Total Assets
3.65B	3.64B	3.94B	3.90B	3.33B	3.71B
	Total Debt
1.26B	1.25B	1.26B	1.22B	814.00M	990.00M
	Net Debt
811.00M	738.00M	561.00M	733.00M	261.00M	159.00M
	Total Liabilities
2.56B	2.54B	2.53B	2.50B	2.22B	2.06B
	Stockholders Equity
1.09B	1.09B	1.41B	1.40B	1.11B	1.65B
Cash Flow		Free Cash Flow
411.50M	454.00M	365.00M	233.00M	320.00M	366.00M
	Operating Cash Flow
462.50M	491.00M	387.00M	285.00M	376.00M	406.00M
	Investing Cash Flow
-277.00M	-41.00M	-36.00M	-284.00M	62.00M	179.00M
	Financing Cash Flow
-462.50M	-610.00M	-114.00M	-127.00M	-694.00M	-88.00M

Sage Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price67.69

Price Trends

50DMA

64.22

Positive

100DMA

64.14

Positive

200DMA

60.37

Positive

Market Momentum

MACD

0.63

Positive

RSI

60.73

Neutral

STOCH

83.59

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SGPYY, the sentiment is Positive. The current price of 67.69 is above the 20-day moving average (MA) of 66.45, above the 50-day MA of 64.22, and above the 200-day MA of 60.37, indicating a bullish trend. The MACD of 0.63 indicates Positive momentum. The RSI at 60.73 is Neutral, neither overbought nor oversold. The STOCH value of 83.59 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SGPYY.

Sage Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BSY	81 Outperform	$14.91B	62.48	25.20%	0.51%	10.71%	-27.64%
MANH	80 Outperform	$11.59B	54.21	89.60%	―	9.18%	14.35%
PAYC	80 Outperform	$15.31B	37.68	24.99%	0.57%	9.86%	-14.34%
SSNC	78 Outperform	$19.79B	24.97	12.34%	1.23%	6.92%	28.43%
PCTY	78 Outperform	$10.70B	48.44	19.70%	―	14.63%	17.15%
SGPYY	78 Outperform	$16.20B	37.80	36.79%	1.42%	9.34%	34.98%
Sector *	62 Neutral	$11.72B	10.43	-7.10%	2.91%	7.41%	-7.94%

* Technology Sector Average

Performance Comparison

SGPYY

Sage Group

67.69

15.35

29.33%

MANH

Manhattan Associates

192.78

-28.45

-12.86%

SSNC

SS&C Technologies Holdings

80.64

19.69

32.31%

PAYC

Paycom

265.71

120.45

82.92%

PCTY

Paylocity

194.28

54.74

39.23%

BSY

Bentley Systems

49.75

1.07

2.20%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.