SAP AG (SAP) AI Stock Analysis

• Market Cap: $316.64B
• Dividend Yield: 0.98%
• Average Volume (3M): 1.66M
• Price to Earnings (P/E): 40.0
• Beta (1Y): 0.96
• Revenue Growth: 11.85%
• EPS Growth: 167.23%
• Country: US
• Employees: 108,187
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.85
• Shares Outstanding: 1,228,000,000
• 10 Day Avg. Volume: 1,642,945
• 30 Day Avg. Volume: 1,656,223
• PEG Ratio: -1.81
• Price to Book (P/B): 6.10
• Price to Sales (P/S): 8.11
• P/FCF Ratio: 62.68
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 8.61
• Enterprise Value/Gross Profit: 11.71
• Enterprise Value/Ebitda: 29.77
• 1Y Price Target: $332.67
• Price Target Upside: 23.42% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 73 Outperform
• Price Target: $301.00 ▲(11.67% Upside)

SAP's overall stock score is driven by its strong financial performance and positive earnings call, highlighting significant growth in cloud revenue and strategic AI integration. However, the high P/E ratio and mixed technical indicators suggest caution. The company's robust financial foundation and strategic focus on cloud solutions position it well for future growth, despite some valuation concerns.

Positive Factors

Cloud Revenue Growth

Sustained cloud revenue growth indicates SAP's successful transition to a cloud-focused model, ensuring recurring revenue and market competitiveness.

AI Integration

Strategic AI integration enhances SAP's product offerings, driving innovation and efficiency, which can lead to increased adoption and long-term growth.

Strong Operating Profit

Robust operating profit growth reflects efficient cost management and strong demand for SAP's solutions, bolstering financial stability.

Negative Factors

Software Licenses Revenue Decline

A sharp decline in software license revenue suggests challenges in traditional sales, potentially impacting overall revenue if not offset by cloud growth.

Delayed Bookings

Delayed bookings can hinder revenue realization and growth, affecting cash flow and operational planning in the near to medium term.

Macroeconomic Challenges

Persistent macroeconomic uncertainties can impact customer spending and SAP's revenue, posing risks to sustained growth and profitability.

SAP AG Business Overview & Revenue Model

Company Description

SAP AG (SAP) is a global leader in enterprise resource planning (ERP) software and business solutions, headquartered in Germany. The company specializes in providing software and technology solutions that help organizations manage their business operations, including finance, logistics, human resources, and customer relationship management. SAP operates across multiple sectors such as manufacturing, retail, healthcare, and finance, offering a comprehensive suite of products and services that include cloud computing, analytics, and data management.

How the Company Makes Money

SAP generates revenue primarily through software licenses, cloud subscriptions, and support services. The company has shifted its focus towards cloud-based offerings, which provide recurring subscription revenue. Key revenue streams include software licenses for on-premise solutions, maintenance and support services for existing software, and cloud services, which encompass platform-as-a-service (PaaS) and software-as-a-service (SaaS) solutions. Additionally, SAP benefits from strategic partnerships with major technology companies and system integrators, enhancing its market reach and enabling collaborative solutions. The growing demand for digital transformation across industries has also contributed to SAP's earnings, as organizations increasingly invest in integrated software solutions to streamline operations and improve efficiency.

SAP AG Financial Statement Overview

Summary

SAP exhibits strong financial health with impressive growth in revenue and profitability metrics. The balance sheet is solid with low leverage, providing stability. Cash flow generation is robust, supporting strategic investments and shareholder returns. While the financial outlook remains positive, close attention should be paid to maintaining equity levels amidst dynamic market conditions.

Income Statement

SAP's income statement shows a solid financial performance with a consistent growth trajectory. The TTM (Trailing-Twelve-Months) total revenue increased to $35.89 billion, reflecting continuous expansion. The gross profit margin stands at 73.5%, indicating efficient cost management. The net profit margin improved to 18.4%, showcasing strong profitability. EBIT and EBITDA margins were healthy at 25.1% and 30.2%, respectively, supporting robust operational efficiency.

Balance Sheet

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.21, indicating low leverage and prudent financial management. The equity ratio is 59.9%, showing a solid capital structure. Return on equity (ROE) is strong at 16.1%, underscoring efficient use of equity capital. However, the slight decrease in stockholders' equity over the periods warrants monitoring.

Cash Flow

SAP's cash flow statement highlights a positive trend with a TTM operating cash flow of $7.28 billion. The free cash flow to net income ratio is 0.98, demonstrating effective conversion of earnings to cash flow. Free cash flow growth rate is notable at 46.8% over the previous period, indicating robust cash generation capabilities. The operating cash flow to net income ratio is healthy at 1.1, reflecting strong cash profitability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	36.49B	34.18B	31.21B	29.52B	26.95B	27.34B
Gross Profit	26.84B	24.93B	22.60B	21.48B	19.73B	19.45B
EBITDA	10.56B	6.47B	7.50B	7.62B	8.92B	8.26B
Net Income	7.08B	3.12B	6.14B	2.28B	5.26B	5.14B
Balance Sheet
Total Assets	68.40B	74.12B	68.33B	72.16B	71.17B	58.48B
Cash, Cash Equivalents and Short-Term Investments	9.93B	11.24B	11.28B	9.86B	11.66B	6.95B
Total Debt	9.12B	10.65B	8.79B	13.09B	15.15B	15.46B
Total Liabilities	25.16B	28.31B	24.93B	29.31B	29.65B	28.55B
Stockholders Equity	42.81B	45.44B	43.16B	40.13B	38.85B	29.71B
Cash Flow
Free Cash Flow	6.48B	4.42B	5.55B	4.77B	5.42B	6.38B
Operating Cash Flow	7.31B	5.22B	6.33B	5.65B	6.22B	7.19B
Investing Cash Flow	-786.00M	-667.00M	906.00M	667.00M	-3.06B	-2.99B
Financing Cash Flow	-7.68B	-3.40B	-7.73B	-6.34B	-56.00M	-4.00B

SAP AG Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 269.55
• 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 SAP, the sentiment is Negative. The current price of 269.55 is below the 20-day moving average (MA) of 272.37, below the 50-day MA of 269.55, and below the 200-day MA of 279.49, indicating a bearish trend. The MACD of 1.56 indicates Negative momentum. The RSI at 47.23 is Neutral, neither overbought nor oversold. The STOCH value of 61.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SAP.

SAP AG Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NOW	82 Outperform	$193.48B	117.07	16.95%	―	21.12%	43.91%
CRM	75 Outperform	$242.60B	37.01	11.20%	0.65%	8.33%	19.69%
WDAY	74 Outperform	$64.81B	112.26	6.66%	―	14.21%	-62.56%
SAP	73 Outperform	$316.64B	40.04	16.30%	0.98%	11.85%	167.23%
INTU	73 Outperform	$190.45B	49.96	20.29%	0.63%	15.63%	30.62%
SNOW	70 Neutral	$87.39B	―	-42.45%	―	28.37%	-35.49%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

SAP AG Corporate Events

SAP SE Earnings Call: Cloud Growth and AI Focus

SAP SE (US) recently held its earnings call, revealing a generally positive sentiment with notable growth in cloud revenue and operating profits, alongside strategic customer acquisitions. However, the call also acknowledged challenges such as delayed bookings and a significant drop in software licenses revenue.