Saturday, May 23, 2015

Analysis of SAP 2015


SAP, a German software company

Company: SAP

ISIN DE0007164600 | WKN 716460 

Business: A German software and software related services company. They divide themselves in three business unites (at least for financial reports): Cloud subscriptions and support, Software licenses and finally Software support. They are also making around 19% of their revenue from something outside of these three business units.

Active: 190 countries world wide.

P/E: 23.6

Here you can find the previous analysis of SAP 2014

contrarian values of P/E, P/B, ROE as well as dividend for SAP

The P/E value of SAP is very high with 23.6 and the P/B is in an equal region with 4.0 which means that Graham would not have liked them! Their earnings to sales are excellent with 19% and their ROE is very good with 17%. The book to debt ratio is good with 1.0 but it used to be much better.
In the last five years they have had a spectacular yearly revenue growth of 7.1% which then gives us a motivated P/E of 19 to 22 which means that SAP is still fairly valued on the market.
They spend a big bunch of their earnings on research and in figures it correspond to 71% so very high and maybe even too high.
They pay a tiny dividend of 1.7% (was increased by 10% from last year) which still correspond to 41% of their earnings so it is at an acceptable level.

Conclusion: Graham is still saying no to SAP and I guess I will have to push my thoughts from the previous analysis one year further hoping that the market will like SAP less in 2016... but I doubt it... all of them (Microsoft, facebook, Amazon, IBM, SAP, Oracle etc.) are now pushing cloud, cloud, cloud and I am still not certain who will "win" and how much revenue there is to collect but it seems to be a lot so maybe they are big boys and share equally.

If this analysis is outdated then you can request a new one.

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