Sap Se (NYSE: SAP)

Sector: Technology Industry: Software - Application CIK: 0001000184
Market Cap 235.43 Bn
P/B 4.47
P/E 27.31
P/S 5.44
ROIC (Qtr) 10.95
Div Yield % 0.00
Rev 1y % (Qtr) 16.64
Total Debt (Qtr) 9.50 Bn
Debt/Equity (Qtr) 0.18
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About

Investment thesis

Bull case

  • Strong operating cash flow of 10.77B provides robust 1.13x coverage of total debt 9.50B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 9.67B provide 4.01x coverage of short-term debt 2.41B, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 10.77B provides exceptional 55.49x coverage of minority interest expenses 194.12M, showing strong core operations.
  • Robust free cash flow of 10.04B exceeds capital expenditure of 727.06M by 13.82x, indicating strong organic growth funding capability.
  • Strong tangible asset base of 45.96B provides 4.84x coverage of total debt 9.50B, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 10.77B barely covers its investment activities of (1.14B), with a coverage ratio of -9.49, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 10.77B provides thin coverage of dividend payments of (3.23B) with a -3.34 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (1.14B) provide weak support for R&D spending of 7.80B, which is -0.15x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 9.67B provide limited coverage of acquisition spending of (825.88M), which is -11.71x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 10.77B provides insufficient coverage of deferred revenue obligations of 7.91B, which is 1.36x, raising concerns about future service delivery capabilities.

Geographical areas [axis] Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 235.43 Bn 27.31 5.44 9.50 Bn
2 SHOP Shopify Inc. 147.12 Bn 119.52 12.73 0.19 Bn
3 UBER Uber Technologies, Inc 147.10 Bn 14.63 2.83 12.08 Bn
4 CRM Salesforce, Inc. 122.20 Bn 594.48 15.45 11.14 Bn
5 INTU Intuit Inc. 113.93 Bn 178.01 32.63 6.78 Bn
6 ADBE Adobe Inc. 111.00 Bn 15.57 4.67 6.65 Bn
7 NOW ServiceNow, Inc. 109.54 Bn 62.67 8.25 2.40 Bn
8 ADP Automatic Data Processing Inc 86.44 Bn 20.41 4.07 4.37 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.46 2.08
EV to Cash from Ops. EV/CFO 26.56 11.38
EV to Debt EV to Debt 30.13 47.67
EV to EBIT EV/EBIT 24.86 6.78
EV to EBITDA EV/EBITDA 21.63 7.15
EV to Free Cash Flow [EV/FCF] EV/FCF 28.48 14.44
EV to Market Cap EV to Market Cap 1.22 -8.88
EV to Revenue EV/Rev 6.61 4.04
Price to Book Value [P/B] P/B 4.47 3.65
Price to Earnings [P/E] P/E 27.31 -117.75
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 3.14 -4.05
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.38
Dividend per Basic Share Div per Share (Qtr) 0.00 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.48
Interest Coverage Int. cover (Qtr) -18.32 -43.57
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -3.40 -222.46
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.38 281.53
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 1.78
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 174.22 -327.55
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 2.39 30.09
EBIT Growth (1y) % EBIT 1y % (Qtr) 154.59 -213.00
EBT Growth (1y) % EBT 1y % (Qtr) 145.93 -86.84
EPS Growth (1y) % EPS 1y % (Qtr) 164.23 108.58
FCF Growth (1y) % FCF 1y % (Qtr) 112.77 6.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 22.04 94.58
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.62 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.28 0.02
Cash Ratio Cash Ratio (Qtr) 0.48 3.78
Current Ratio Curr Ratio (Qtr) 1.17 8.27
Debt to Equity Ratio Debt/Equity (Qtr) 0.18 0.14
Interest Cover Ratio Int Coverage (Qtr) -18.32 -43.57
Times Interest Earned Times Interest Earned (Qtr) -18.32 -43.57
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 30.10 -105.03
EBIT Margin % EBIT Margin % (Qtr) 22.60 -130.16
EBT Margin % EBT Margin % (Qtr) 28.04 -121.17
Gross Margin % Gross Margin % (Qtr) 73.20 58.37
Net Profit Margin % Net Margin % (Qtr) 19.90 -126.13